If there is an industry in Australia that needs confidence right now, it’s the residential construction sector.
Yet, at a time of unprecedented need to build, construction companies are collapsing like houses of cards, leaving consumers with lost deposits and half-finished homes.
For consumers, embarking on building or renovating a home represents a large financial commitment.
However, when compared to other major investments that Australians will make in their lifetime, protection for their funds is limited.
Indeed, builders can – and do – spend consumer deposits in any way that they please.
Australia needs to build new homes.
Driving demand is both high immigration, with 2023 seeing net migration of 518,000 immigrants, coupled with an ongoing trend for fewer habitants per home.
On the supply side, building commencements are in decline, with 2024 data for new dwelling commencements at 10-year lows.
Overall, the ratio of new population to new dwelling approval is the worst since data began to be recorded in 1984.
Despite this urgent need to build, residential construction companies are going into liquidation at an alarming rate.
According to ASIC data, in the 2023-2024 financial year, 2832 construction companies went into insolvency in Australia, representing the greatest proportion of company collapses and a problem that is trending worse, not better.
These are not small or newly established companies, either.
Several industry-revered names have gone under, including Clough Group, Probuild and Porter Davis Homes.
Covid disruptions,........