Why the ‘apocalyptic’ collapse could be good news

Industry insiders have revealed a silver lining to a construction giant’s potential collapse after rumors swirled about Metricon this week.

Industry insiders say there could be a silver lining to the ‘doomsday’ scenario of a major construction company collapsing, predicting the fallout could be good news for mortgage payers.

Concerns are growing that construction giant Metricon is on the brink of ruin, after allegations the company is facing serious financial problems emerged.

Experts say the demise of a major construction company could lead to higher insurance premiums for new construction, a short-term increase in the costs of materials and craftsmen, or even another spike in the price of building materials. real estate.

But that could be longer-term good news for homeowners, as it could lead to lower interest rate hikes as Australians lose confidence in buying new builds and demand for materials plummets.

Real Estate Institute of Victoria chief executive Quentin Kilian said the collapse of a major builder could impact rental costs.

“They (buyers and tenants) would have no choice, if you hinder new supply, it doesn’t leave you much choice but to look at the established market,” Mr Kilian said via the sun herald.

Building and construction law expert Peter Lettieri said that in most cases even if a builder complied they would be replaced by another under compulsory national building insurance.

In this case, many of the same contractors who had worked on the property would return to complete the job at an “added bonus”.

“That’s usually around $300,000, so you can imagine those nearing the end of labor might be well covered,” Lettieri said.

“But if you’re only in the early stages, if the costs are more than that, you may be out of pocket.”

Metricon representatives met with the Victorian government on Thursday for crisis talks on the growing problems plaguing the sector, including soaring costs of key materials such as timber and steel.

The company’s interim CEO, Peter Langfelder, dismissed claims that Metricon was on the brink, saying it was “business as usual” during a press conference at a construction site, although he admitted that the company was experiencing delays on projects.

“Our business has been very strong for 45 years and will continue to be for a very long time,” Langfelder told reporters, following the sudden death of founder Mario Biasin on Monday.

“The reality is we are strong, we are paying everyone on time, no one has been late with payments and if anyone can show up.”

Gold Coast-based Condev and industry giant Probuild have both gone into liquidation in recent months, while smaller operators like Hotondo Homes Hobart and Perth, Home Innovation Builders and New Sensation Homes, as well as Sydney-based Next, have also failed, leaving homeowners out of pocket and with unfinished homes.

But an email sent to Metricon customers on Thursday afternoon after Mr Langfelder’s press conference reveals how scared Australians are, following a series of high-profile building collapses.

The email started “baseless rumours”. Metricon was in trouble, instead insisting that “business was business as usual”.

“Hello, we wanted to contact you following media speculation about the future of our business,” the email begins.

“Today we reaffirmed our long-term viability, following the sudden passing of co-founder and CEO Mario Biason on Monday via a press release.

“Our displays remain open for business as usual and our new Home Advisors are ready to help you start your new homebuilding journey.”

However, when the email was later shared on social media, it drew a slew of angry, laughing emojis, indicating many Australians are still not convinced the company was clear.

They include NSW couple Jessica Snowdon and her husband Steve, who told news.com.au they were terrified of Metricon’s situation after they paid $31,500 in an initial deposit to the company just a short time ago. four weeks.

“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 if we should withdraw or not, if we withdraw we always lose our money.”

Founded in 1976, Metricon is the biggest player in the industry, employing 2,500 Australians with 4,000 projects underway, which is why speculation about the giant’s collapse has caused panic across the country.

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