Construction saga twists as owners fight back

Metricon customers are trying to regain some power amid the construction industry’s cost crisis.

Metricon customers have filed complaints with Victoria’s consumer watchdog over construction delays and faulty construction.

The Saturday Herald Sun reports that customers have contacted Consumer Affairs and the Victorian Building Authority in recent weeks, with some having to take their cases to the state’s highest court to resolve their complaints.

It comes just days after it was revealed Victoria was considering some form of support that would help Metricon and other businesses survive after a series of cost explosions threatened to end it.

Treasurer Tim Pallas said publishing supporting the industry was a top priority and he was “concerned” about the state of the sector, but he declined to comment on what form the support would take, the Herald Sun reported.

“As you would appreciate with fixed price contracts, we are seeing a bit of pressure in this market,” he told the Herald Sun.

“The government is looking at what it can do to help.

“Right now, our main focus is on the situation Metricon is facing.”

For weeks speculation has been mounting that construction giant Metricon was on the brink of collapse, with company representatives meeting the Victorian government late last month for crisis talks over escalation issues plaguing the sector, including soaring costs of key materials such as wood and steel.

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

Just last week, Metricon injected $30 million into its business to allay fears about its survival.

Speaking to Today this morning, Brian Seidler of the Master Builders Association said the sector had been hit by a ‘perfect storm’ of problems including rising demand after the pandemic, soaring cost of materials and employee shortages that drove up prices for customers – and it was all because many countries had relied on the industry for post-Covid economic recovery.

“Unfortunately, everyone builds, and that not only impacts materials but also labor costs,” Seidler said.

He added that he believed the price spike would begin to level off in the coming months, although it would still be some time before prices fell.

“We have seen major spikes in the last six months, up to 40% in steel and 35% in timber, and they have had a huge impact on the cost of construction, especially in the sector. residential,” he said. said, adding that deadlines were also exploding due to the combination of pressures.

Mr Seidler also said builders who had gone through a bidding period during Covid were now playing hardball.

“We’ve had massive increases and we have builders saying, well, we can’t just build for the prices we did 20 months ago,” he said.

Experts have agreed that the construction industry’s horror run means it is at greater risk of insolvencies.

Russ Stephens, co-founder of the Association of Professional Builders, estimated that around 50% of construction companies in Australia are currently insolvent, meaning they cannot pay their bills.

It comes as the Australian Bureau of Statistics showed housing approvals were well down from April 2021 levels with a 32.4% drop.

From March to April, new home approvals also fell 2.4% to 14,908 – beating economists’ expectations of a drop of just 1%.

JP Morgan economist Jack Stinson predicted that building approvals will continue to fall as interest rates rise and house prices fall.

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