Liam McNally
The manager of a west Melbourne building company said that rising costs, COVID delays, and trade shortages have created a “perfect storm” of pressure in the building industry, but there is “light at the end of the tunnel”.
The Melbourne building industry has taken significant hits this year, with Porter Davis going into liquidation and leaving more than 1500 homes unfinished, and Hallbury Homes and Lloyds Group also entering into administration.
Keogh Homes is a family owned custom builder based in Hoppers Crossing that services Melbourne’s CBD, west, north, and out to Geelong and Ballarat.
Keogh Homes general manager Patrick Keogh said “builders are going bust left, right and centre” due to fixed-price contracts being outpaced by inflation.
“I won’t sugar coat it, it’s affecting every builder in the state,” he said.
“[The cost to build] a house with four bedrooms, two living areas, has gone up between $120,000 and $150,000 in the last four years.
“Working on fixed price contracts we’ve got no wiggle room if there’s price increases that get passed on from material suppliers or trades.”
Mr Keogh said secondary issues were worker shortages and COVID-delays.
“There is just a lot of work out in the ground at the moment, and not enough trades out there to do it,” he said.
“The volume builders rely on smaller margins but greater volume of work, and they rely on getting through jobs quicker… But because of all these delays on site that’s obviously pushed them out and they’ve felt the pain from that.”
Mr Keogh believes that with such large companies going under, the industry will begin to correct itself.
“There certainly is light at the end of the tunnel,” he said.
“With what’s happened to the other builders who have gone bust recently there is going to be a bit more of an influx of trade availability so in the next few months that’s going to make things a lot easier and get jobs moving.
“And then obviously every contract that we’ve signed in the last six months has been based on current prices and inflated prices that we expect to come through in the next few months. Unfortunately that means increased prices that we have to pass on to the clients but obviously that’s what we need to do to remain viable.”
