Major construction company is asking hopeful homeowners to shell out extra cash to complete their home

Up to 20 construction companies are feared to be on the verge of collapse as Australia’s construction industry takes another beating.

Two construction companies in Perth went bankrupt last week – Home Innovation Builders and New Sensation Homes.

Tristan Kirkham, managing director of New Home Building Brokers, said he’s heard customers from several different companies say their builders aren’t getting the job done – but there’s a bigger problem.

A combination of labor shortages, lack of materials and rising costs was putting more pressure on trades than ever, with many builders forced to absorb price increases themselves (workers are seen in a house in Brisbane)

Supply chain issues and lack of inventory from domestic and international sources have led to a spike in demand and prices for materials, with some construction companies forced into liquidation

Supply chain issues and lack of inventory from domestic and international sources have led to a spike in demand and prices for materials, with some construction companies forced into liquidation

“Right now I’m very worried about builders, they’re not all shady. If we don’t make a change in this industry and the way we do it, builders will continue to fall,” said he told Daily Mail Australia.

He said customers were ringing in panic because they saw no progress on construction sites, but he insisted workers were not to blame.

A combination of labor shortages, lack of materials and rising costs was putting more pressure on trades than ever, forcing many builders to absorb price increases themselves.

Supply chains have also been interrupted by the coronavirus pandemic.

Mr Kirkham said that due to high demand for materials, many builders had to delay work, including one who received only three-quarters of the amount of timber he needed for a house.

“Builders are being told the materials are delivered, but they’re not,” he said.

“I’m mostly concerned that if the price increases keep happening, builders can’t stand the randomness of some of these prices.

“I’ve never seen anything like it in 21 years in the industry.”

Following the collapse of Home Innovation Builders on Monday and New Sensation Homes on Friday, Mr Kirkham warned there is a strong likelihood that more businesses will sink.

Gold Coast Condev, Probuild in Brisbane and Hotondo Homes in Hobart are among other companies to collapse in 2022.

Supply chain issues and lack of inventory from domestic and international sources have led to a spike in demand and prices for materials.

The costs of metal ores, plastics and timber have been rising steadily for years, but especially so during the pandemic as factories were forced to close for long periods.

The trickle-down effect of these rising costs forced Australian workers to cover the difference and the country was on the verge of a major crisis.

“I don’t think a lot of companies take cost increases seriously. It’s a perfect storm,’ Matthew Mackey, chief executive of engineering firm Arcadis, told Daily Mail Australia last month. =

“Small businesses don’t have the cash, they don’t have the same safety net. They will feel the pain much earlier and much harder.

Materials, including steel and wood, are seeing the biggest price spike due to international demand and lack of supply. Electrical products, PVC and roofing materials are also becoming more expensive.

While large companies are handling large orders, small and medium-sized businesses are struggling – with extended waiting times for materials affecting jobs.

Margins are also dropping significantly, with the construction industry typically only making profits of between 2-4%.

The construction industry in Western Australia is facing a major crisis with fears many businesses could go bankrupt due to staff shortages and soaring costs (pictured are construction workers at Sydney)

The construction industry in Western Australia is facing a major crisis with fears many businesses could go bankrupt due to staff shortages and soaring costs (pictured are construction workers at Sydney)

Mr Mackey said contractors were feeling the pinch after locking themselves into deals months before the cost of materials rose, so they had to bear the brunt of the difference and make only minimal profits or even a loss.

“Some people blame the pandemic, others blame increases in hardware costs, but there is a bigger problem and it will affect big businesses and small businesses alike,” he said.

The market tries to react to volatility. It’s less now about the availability of supply, but energy costs are skyrocketing, commodity prices continue to rise, and material costs continue to rise.

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