Unprofitable building contracts, cost blowouts, planning delays, labour shortages, red tape and other challenges sent nearly 3000 building companies broke in the last financial year, new official insolvency figures show.
According to corporate watchdog ASIC, there were 2832 construction industry insolvency appointments for the 2024 financial year until June 16, an increase of 28 per cent on the 2213 insolvencies over the previous financial year.
The construction sector remains by far the single largest category of insolvency. The next worst performer, accommodation and food services, had just under 1600 corporate failures.
However, a 32 per cent rise in total corporate casualties to 10,497 for the financial year to June 16 marginally cut the construction industry’s share of total insolvencies to 27 per cent, from nearly 28 per cent in FY23.
Highlighting how sharp the downturn has been for builders since the cost of construction surged after the pandemic (resulting in many fixed-price contracts becoming loss makers), insolvencies have more than doubled from the 1200 failures recorded in the 2022 financial year.
Master Builders Australia chief executive Denita Wawn told The Australian Financial Review that builders had borne the “largest risk” of the recent economic downturn and a 40 per cent blowout in the cost of construction.
“Tradie shortages, planning and licensing delays, draconian industrial relations changes, material cost inflation, inefficient regulation, unfeasible lending practices and risk allocation have compounded to make projects unsustainable,” Ms Wawn said.
“We have to make it easier to build new homes by bringing down the cost of construction and reducing the time it takes to build.”
Over the first two weeks of June, there were 120 insolvency appointments at building companies, ASIC figures show. There were 314 in May and 255 in April.
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PAYWALL:
Unprofitable building contracts, cost blowouts, planning delays, labour shortages, red tape and other challenges sent nearly 3000 building companies broke in the last financial year, new official insolvency figures show.
According to corporate watchdog ASIC, there were 2832 construction industry insolvency appointments for the 2024 financial year until June 16, an increase of 28 per cent on the 2213 insolvencies over the previous financial year.
The construction sector remains by far the single largest category of insolvency. The next worst performer, accommodation and food services, had just under 1600 corporate failures.
However, a 32 per cent rise in total corporate casualties to 10,497 for the financial year to June 16 marginally cut the construction industry’s share of total insolvencies to 27 per cent, from nearly 28 per cent in FY23.
Highlighting how sharp the downturn has been for builders since the cost of construction surged after the pandemic (resulting in many fixed-price contracts becoming loss makers), insolvencies have more than doubled from the 1200 failures recorded in the 2022 financial year.
Master Builders Australia chief executive Denita Wawn told The Australian Financial Review that builders had borne the “largest risk” of the recent economic downturn and a 40 per cent blowout in the cost of construction.
“Tradie shortages, planning and licensing delays, draconian industrial relations changes, material cost inflation, inefficient regulation, unfeasible lending practices and risk allocation have compounded to make projects unsustainable,” Ms Wawn said.
“We have to make it easier to build new homes by bringing down the cost of construction and reducing the time it takes to build.”
Over the first two weeks of June, there were 120 insolvency appointments at building companies, ASIC figures show. There were 314 in May and 255 in April.