The wave of building company failures shows no signs of slowing down, with Perth homeowners facing financial losses and construction delays as a seventh builder collapses within weeks.
Western Australian builder Nicheliving has had their contractors licence renewal revoked, adding hundreds more frustrated customers to the list of those affected by recent builder failures.
Building and Energy, advised homeowners with unfinished or defective projects to contact QBE to discuss their home indemnity insurance policy.
Home indemnity insurance offers financial protection for homeowners if their builder becomes insolvent.
By reaching out to their insurance provider, homeowners can start the process of hiring another registered builder to finish the work or pursue other available remedies.
Despite a slowdown in building cost inflation, further company failures are still highly probable.
National Housing Accord Targets
According to the latest data from the Australian Bureau of Statistics, approximately 110 construction companies in Western Australia have collapsed this financial year, with nearly 2,100 failures nationwide.
The wave of building company failures couldn’t come at a worse time, jeopardising the state’s ability to meet its National Housing Accord targets.
Western Australia is currently projected to fall short of its Accord target by over 15,000 homes.
Master Builders Australia released its 2024 building and construction industry forecasts today, which for the first time, span the entire five-year period of the Accord.
From July 1, 2024, to June 30, 2029, Master Builders forecasts 1,087,325 new home starts.
Matthew Pollock, CEO of Master Builders Australia Western Australia (MBAWA), stated that while the situation remains dire, there are some signs of potential improvement.
One positive development is that inflation is nearing its target range, and we anticipate interest rate cuts that will significantly impact the overall economy.
However, despite the Federal Government’s new measures aimed at boosting supply in social and affordable housing and the rental market, significant concerns remain.
Perth Construction News August 2024 Industry Challenges
The industry’s biggest challenge continues to be workforce shortages, and the impact of industrial relations changes cannot be overstated.
These forecasts indicate that capacity constraints in the industry will result in falling short of the Federal Government’s housing targets.
At the federal level, the government’s priority should be expanding the building and construction workforce, rather than implementing industrial relations reforms that complicate home building.
Domestically, we cannot bridge this gap alone. We need innovative solutions, such as better apprenticeship incentives, reskilling migrants already in the country, and a targeted international campaign to attract skilled migrants.
The WA Cook Government has taken positive steps to address labor and skill shortages, but we need the Federal Government to match this effort in building the industry’s human capital if we are to meet their targets.
Industry productivity has significantly declined over the past decade. To address this, we need increased investment in training and greater flexibility in workplace conditions.
Without immediate supply-side reforms, every state in Australia is likely to miss its housing targets.
Property Prices Increase Due to Decline in Building Approvals
The significant gap between high demand and the substantial undersupply is sustaining property prices despite persistently high interest rates, which would typically drive prices down.
Population growth is further exacerbating the rise in property prices.
With annual building approvals at only about a quarter of population growth, capital growth seems inevitable.
You can’t have such a significant gap between demand and supply without it leading to soaring property prices.
Additionally, Perth construction news August 2024 has noted that the latest monthly building approvals indicate the situation is worsening, as high interest rates and construction costs severely impact the building industry, disrupting any chance of a balanced market.
The last time there was such a significant disparity between population growth and building approvals was decades ago.
Further analysis reveals a shortfall of nearly 90,000 dwellings per year, given that the average household size in Australia is 2.5 persons.
Contact building inspections Perth for further updates.