Although demand for residential property remains high, it is proving to be a tough economic climate for the construction industry, according to Pete Wargent, co-founder of Australia’s first national marketplace for buyer’s agents, BuyersBuyers.
Wargent said it is a challenging period for developers in Australia, with the price of materials and labour rising sharply.
“Recently, we have seen Probuild head into administration, while Condev and Privium have also stumbled into liquidation, leaving many live projects unfinished and contractors out of work,” he said.
“In Perth, New Sensation Homes and Home Innovation builders are among the latest casualties within the past week.
“The construction sector is one of the most important industries in the country, with over 1.15 million employees directly engaged in the sector, so this is a key cornerstone of the Australian economy.”
Wargent said construction costs have continued to increase in 2022, so there is little respite in sight for a beleaguered sector, especially with the Reserve Bank telegraphing an increase in the cost of financing.
“There is still a large pipeline of residential construction to be worked through,” he said.
“Thanks to government stimulus packages there were still more than 100,000 detached homes under construction all around the country at the end of 2021, so there is still a huge pipeline of residential work due to be completed.”
BuyersBuyers CEO Doron Peleg said further insolvencies will inevitably follow later in 2022.
“We expect to see construction insolvencies making up for lost ground and rising significantly over the year ahead,” she said.