Industry insiders have revealed a silver lining to the potential collapse of a building giant after rumours swirled over Metricon this week.
Industry insiders claim there could be a silver lining to the “doomsday” scenario of a major building company collapsing, predicting the fallout could be good news for mortgage payers.
Concern has been mounting that building giant Metricon is on the verge of ruin, after claims the company is facing serious financial problems emerged.
Experts say the demise of a major construction firm could lead to increased insurance premiums for new builds, a short-term rise in material and tradespeople costs, or even established property prices surging again.
But this could be good news in the longer-term for homeowners, as it could cause interest rate rises to decrease as Australians lose confidence in buying new builds and demand for materials falls.
Real Estate Institute of Victoria chief executive Quentin Kilian said a major builder’s collapse could impact rental costs.
“They (buyers and tenants) wouldn’t have a choice, if you hamper new supply then that doesn’t leave you with much choice other than to look at the established market,” Mr Kilian said via the Herald Sun.
Building and construction law expert Peter Lettieri said in most cases, even if a builder did fold, they would be replaced by another under mandatory domestic building insurance arrangements.
In this case, many of the same subcontractors who had been working on the property would return to finish the job with a “premium added to it”.
“That is usually around $300,000, so you can imagine those anywhere near the end of the job might be well covered,” Mr Lettieri said.
“But if you are only in the early stages, if the costs are greater than that, then you are going to be out of pocket potentially.”
Metricon representatives met with the Victorian government on Thursday for crisis talks about the escalating issues plaguing the sector, including the surging costs of essential materials such as timber and steel.
The company’s acting CEO Peter Langfelder has shot down allegations Metricon is on the brink, declaring it was “business as usual” in a press conference on a building site, although he admitted the company was experiencing some delays on projects.
“Our business has been very strong for 45 years and will continue to (be), for a long, long time to come,” Mr Langfelder told reporters, following the shock death of founder Mario Biasin on Monday.
“The reality is, we’re strong, we’re paying everybody on time, nobody’s been behind in any payments and if anyone can turn up.”
Gold Coast-based Condev and industry giant Probuild both went into liquidation in recent months, while smaller operators like Hotondo Homes Hobart and Perth firms Home Innovation Builders and New Sensation Homes, as well as Sydney-based firm Next, have also failed, leaving homeowners out of pocket and with unfinished houses.
But an email sent to Metricon customers on Thursday afternoon following Mr Langfelder’s press conference reveals just how spooked Aussies are becoming, following a string of high-profile construction collapses.
The email hit out at “baseless rumours” Metricon was in trouble, instead insisting it was “business as usual”.
“Good afternoon, We wanted to reach out following media speculation about the future of our company,” the email begins.
“Today we reaffirmed our long-term viability, following the sudden death of co-founder and CEO Mario Biason on Monday via a media statement.
“Our displays remain open for business as per normal and our new home advisers are ready to help you start your new home building journey.”
However, when the email was then shared on social media, it attracted a slew of angry and laughing emojis, indicating many Aussies remain unconvinced that the firm was in the clear.
They include NSW couple Jessica Snowdon and her husband Steve, who told news.com.au they were terrified by the Metricon situation after forking out $31,500 in an initial deposit to the firm just four weeks ago.
“We were just freaking out [when we saw the news], what’s going to happen?” Ms Snowdon told news.com.au.
“It’s scary because we don’t know whether to pull out or not, if we pull out we still lose our money.”
Founded in 1976, Metricon is the largest player in the sector, employing 2500 Australians with 4000 projects in the pipeline, which is why speculation about the giant’s collapse has sparked panic across the nation.