One of the main factors in the housing crisis in Australia has been revealed, amid fears of large companies such as Metricon not surviving.
Australia’s housing construction industry is struggling with an ‘unprofitable boom’ as the sector struggles under the weight of the shortage of skilled workers and rising material costs.
And it’s not just companies that are feeling the pressure, consumers are also facing the consequences in the form of prolonged construction delays and unexpected cost bursts.
Supply chain delays also add to the chaos, with thousands of Australians left in limbo as they are forced to wait for building materials to be available before work can begin.
As a result, construction times have risen from about eight months to a year, according to a new report released today by the Housing Industry Association (HIA).
The report also reveals that the number of single-family homes under construction has increased exponentially, by 75% more than in 2019.
The rising cost of construction, which is rising at a rate of 15 percent a year, the fastest rate in more than 40 years, is proving to be a killer for housing companies.
Steel prices are 42 percent higher than last year, wood is 21 percent higher, electrical products are 14 percent more expensive, and the cost of bathroom accessories has risen 13 percent per cent.
Rising costs and construction delays mean that these companies now have a fixed-price project delay to complete from early 2021, from which they essentially do not make a profit.
That’s what HIA chief economist Tim Reardon said The Daily Telegraph that these are the contracts that are the most difficult.
“The non-profit boom is a precise turn,” he said.
With big names like construction giant Probuild, Gold Coast’s Condev company and smaller operators such as Hotondo Homes Hobart, Home Innovation Builders and Next collapsing this year, it’s clear that the construction industry of Australia is on the brink of a knife.
Russ Stephens, co-founder of the Professional Builders Association, has estimated that around 50 per cent of Australian construction companies are currently marketing insolvent, which means they cannot pay their bills.
“The collapse of a construction company alone could literally affect thousands of consumers,” he told news.com.au last month.
“It’s easy for a large company to delay the decision to go into liquidation for six months or even a year … However, as we get to the end of the year, it’s probably safer to predict that there could be thousands of consumers affected by the collapse of construction companies. ”
Stephens said the average cost of building an Australian house had faded from $ 40,000 to $ 150,000 and warned that fixed-price contracts had to go.
He warned that customers should take advantage of the money to raise the price or risk their builder collapsing and it costs them much more to complete their home.
“Builders have had to absorb the costs, but what has exacerbated the problem has been not only rising material prices, but also delays due to Covid,” he said.
“Builders have a limited number of projects that they can take on at any time and when a project usually lasts 25 weeks, but has been extended to 30 weeks, it means that fixed costs increase, but the cost to the consumer remains the same “.
Fears for Metricon continue
Rumors are still circulating that the Australian housing giant could be on the verge of collapse after the shocking death of its founder Mario Biasin, despite the company denying speculation.
However, many of its customers and employees remain concerned about the future of the company.
A Queensland couple who signed a contract with Metricon for the construction of their home near Ipswich said they had not received information about the state of their construction, and the company told them in a statement to the media. in response to questions.
Emily Martin told Nine News that she had signed a contract with Metricon in November, but was unsure when construction would begin.
“Between our land depot and the house depot, we have $ 38,000 in our pocket and we are not in a month after construction begins,” he said.
Last week, Metricon’s acting general manager Peter Langfelder refuted ongoing allegations about the company, saying it was “as always” at a press conference at a construction site, although he admitted that the company was experiencing some project delays.
“We have a strong track record of performance, all of our existing contracts are profitable, we are fully up to date with all our trades, our suppliers, our employees, the commissions, everything is completely up to date,” he said.
“In terms of our business, this is what is common.
“Our business has been very strong for 45 years and will continue to be so [be] for a long time “.
Despite the claims of Mr. Langfelder, reports emerged that Metricon representatives met with the Victorian government for talks on the crisis over growing problems affecting the sector, including rising costs of essential materials such as wood and steel.