September 10, 2024 by Dymphna

Home building has become a roll of the dice

Meet one of the unluckiest women in Australia.

Imagine having a contract with a builder to build a new home. Maybe you put down a deposit. Maybe there’s milestone payments.

And then poof. The builder goes bankrupt.

So you find another builder. And poof. They go bankrupt too.

No way.

That’s exactly what happened to Karishma Seechurn when Grandeur Homes in Victoria collapsed last week.

A lot of people were caught out by it. On the 21st of August Grandeur Homes told news.com.au that “we are thriving.”

“Grandeur Homes is solvent and is not in financial difficulty. The suggestion that it is in financial difficulty is false and, if published, would cause substantial and unjustified damage to its trading reputation.”

Turns out they weren’t. Just nine days later they were in administration.

That’s left over 100 projects in limbo.

That sucks.

But it’s an increasingly common story in Australia right now.

Are for Karishma Seechurn, it’s the second time it’s happened in a few years.

She originally tried to build with Snowdon Developments in 2020 before the company collapsed. She then signed with Grandeur Homes in 2023, but now they’re bankrupt, and she’s left paying a mortgage on a half-built house.

“I’m super stressed and upset”, she told news.com.au in tears. “The stress of having two builders going under is just unimaginable”.

“I’m really worried about the situation of the house as I just have scaffolding all around and the top is frames. They don’t look good anymore, they have been weathered badly”.

“The company said the roof tiles were going to be on site but it never came, so now it will be over a year that the frames have been exposed”, she said.

Meanwhile, the homeowner is stuck paying a mortgage on a home that she cannot occupy. It is a financial disaster in the making.

“Even though they have gone under I still have to pay my mortgage”, she added.

Oh poor love. What a drama. Having one builder go bust on you would be bad enough? But two?

And now she’s got to find another builder to take it on, which must feel like another gamble.

Because it is a roll of the dice right now. There is still a massive shake-out going on in the construction industry.

Fixed-price contracts, a surge in building costs during Covid, and a surge in demand through the Homebuilder program created a perfect storm.

Builders have been holding on as long as they can, but the storm’s not over yet, and each week, more of them just pull the plug.

Over 3,000 builders have gone bust in the past 12 months.

There’s been a huge surge in construction industry bankruptcies. And it’s not clear to me that we’re out of the woods yet. That number could push higher still.

Which all begs the question, how are we going to build our way out of the housing shortage if there’s no builders to do it?

The housing shortage will take decades to unwind.

DB