Another major building company has announced it has gone into administration.
NSW-based Elderton Homes informed customers on Monday afternoon the business had faced ongoing struggles, citing natural disasters and the nation’s economic conditions following the pandemic.
“Today Elderton Homes has made the difficult decision to appoint Administrators to manage its ongoing affairs,” the designer home company said in a statement on Monday.
“This has been a difficult decision and a result of several factors, not limited to but including bushfires, floods, a global health pandemic and economic conditions. The impact of these events continue today.
“Furthermore, the Construction Industry has also been subject to record levels of rainfall, substantial price increases on building materials, supply chain challenges and labour shortages.
“Elderton Homes is proud to have built thousands of homes for customers around Greater Sydney, Central Coast, and Illawarra and have assisted our clients build their first home, investment properties, and dream homes.
“We want to thank our amazing internal team members, suppliers and subcontractors who have helped us on our journey over the past 13 years.”
A spate of construction companies have collapsed this year with more than a dozen failing caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.
Last week, Brisbane-based builder Lanskey Constructions QLD went into liquidation.
In August, major Queensland residential builder Oracle Platinum Homes went into liquidation owing $14 million and impacting 300 homes, 200 suppliers and subcontractors and 70 staff members who were made jobless.
Another Queensland builder, Besse Construction, collapsed the same month owing $1.7 million.
Industry giant Gold Coast-based Condev also went into liquidation earlier this year.
In July, Snowdon Developments was ordered into liquidation by the Victorian Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million.
Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes, Statement Builders and Langford Jones Homes.
Then there was NSW building company Willoughby Homes, which went into voluntary administration, leaving at least 30 homes in limbo.
Also shuttered was Norris Construction Group, which was in Geelong, collapsing in March with $27 million in debt. It owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator’s report.
RBA warned of industry’s struggles
In October 2019, the Reserve Bank warned the construction industry to prepare for a bust after a boom throughout the previous decade.
Between April 2012 and November 2017, the construction sector underwent an enormous boom following a period of rapidly falling activity resulting from the end of projects driven by the Rudd and Gillard government’s first homeowner grants.
During this period dwelling approvals rose by 119 per cent and the construction sector enjoyed a period of strong growth even while other parts of the economy struggled.
At the start of 2020, it was all very much looking like the RBA’s concerns about the future of the construction sector were unjustified. But when the pandemic arrived on Australia’s shores just a few months later everything changed.
In just a few months the fortunes of the construction sector changed dramatically, from a slowly dwindling pipeline of projects to unprecedented levels of government support for the industry.
From June 4 2020, the federal government’s ‘HomeBuilder’ program provided a $25,000 grant for eligible new builds and large scale home renovations on homes that met the government’s criteria. According to the federal Treasury as of March 2022, HomeBuilder had cost a total of $2.1 billion and received more than 137,000 applications (113,113 for new builds and 24,642 for renovations).
According to an analysis from Master Builders Australia, the value of building work supported by HomeBuilder amounted to $41.6 billion.
Various state and territory government grants for new homes also helped boost the number of new homes under construction to all time record highs.
Meanwhile, as the way Australians live and work changed dramatically as a result of the pandemic, demand for home renovations surged. According to the ABS during 2021 Australians spent $12.3 billion on renovating their homes, up 33 per cent compared with 2020.