Two building companies collapse amid national housing downturn


Updated March 14, 2019 00:30:08

Two South Australian building companies are facing collapse, and another is facing court action, amid ongoing pressure from the national housing downturn.

Key points:

  • New home builds are declining in South Australia
  • Several companies have closed and subcontractors are feeling the impact
  • Masters Builders SA wants more financial incentives for property owners

Adelaide construction company Tudor Homes has gone into liquidation and JML Home Constructions, which operates the Onkaparinga GJ Gardner franchise, has closed its doors.

An application to wind up Cubic Homes, based in Kilburn, will be heard later this month.

It follows the recent demise of a string of local companies, including ODM Group, OAS Group and Platinum Fine Homes.

Liquidators were appointed by Tudor Homes’ shareholders late on Tuesday.

The company’s liquidator, Heard Phillips Chartered Accountants, told the ABC the firm was insolvent with outstanding creditors.

It said the majority of homes under construction had been sold to another company, but a number of customers were impacted by the collapse.

The liquidator said Tudor Homes had been a defendant in litigation for some time.

Subcontractors left in the lurch

Master Builders SA chief executive Ian Markos said low population growth, reluctant bank lending, planning laws and inefficient land release had created a perfect storm.

“We need to turn this decline around, and we’ve had months and months on end with declining new home builds,” he said.

Roofer Justin Noble said he felt for building companies, even though the downturn had impacted subcontractors too.

“Everyone’s going through tough times … it’s affected me from November last year,” he said.

“[I know] at least 50 people who are owed money. Just one company that’s going under, they owe … I’m told, close to $700,000 across all trades.”

Mr Noble said he was slowly reclaiming outstanding payments totalling $140,000 but was selling his house to survive.

“I’m just keeping afloat … I’ll probably try and do another 10 years before I do something different,” he said.

Calls for political intervention

Data from the Australian Bureau of Statistics (ABS) showed residential building construction declined nationally by 1.2 per cent in the three months to the end of December 2018.

The trend estimate for total building approvals throughout the country fell 3.2 per cent in January 2019.

A recent ANZ Stateometer listed Tasmania and Northern Territory as the only states without negative growth during the December quarter.

Shadow treasurer Stephen Mullighan said the State Government needed to address the issue quickly, with building approval values falling by 33 per cent in the past year.

“The Government needs to sit down with the industry and start working on how we can get more houses built in SA and work out how the thousands of people employed have a job for the future,” he said.

Mr Markos said Master Builders SA’s ‘Make Housing Great Again’ plan would help address some of the state’s housing woes.

The plan outlines five initiatives, including a boost to the first home owner grant and a Productivity Commission review of land and property taxes and charges.

“Some of [MBA’s] policy ideas will definitely help to turn this around,” Mr Markos said.

“[It] would stimulate the construction industry by up to 1,000 additional homes and create up to 4,700 new full-time jobs.”

Mr Markos said he had met with Premier Steven Marshall and Treasurer Rob Lucas to encourage them to adopt the policies, some of which had already been implemented interstate.

Government not extending hand

Treasurer Rob Lucas said budgetary pressures would not allow for those financial incentives.

“Some of the other issues they’ve raised of a non-financial nature, such as planning, building issues like that, are being considered by the appropriate Government departments and agencies,” he said.

“In relation to the big financial asks of significant cuts in stamp duty, because of the massive cut in GST revenue next year, we’re just not in the financial position to be able to undertake that.”

SA Premier Steven Marshall said there was a “massive” amount of construction happening in the state.

“It doesn’t mean to say that every single business in South Australia is going to be going through boom times, but we’re satisfied that at the moment there is enough economic activity in this state,” he said.

Topics: building-and-construction, industry, business-economics-and-finance, consumer-finance, adelaide-5000, sa, seacliff-5049

First posted March 13, 2019 13:18:24