Construction boom over amid warnings industry could go bust 

Warnings have been raised the construction industry could be about to go bust following a long boom in the industry.  

The Reserve Bank of Australia warned in October 2019 the construction industry was going to experience a downturn.

The warning came after the industry enjoyed a massive boom between April 2012 and November 2017.

Home building approvals rose by 119 per cent with more being constructed than ever before.




Warnings have been raised the construction industry could be about to go bust following a long boom in the industry (stock image)





The Reserve Bank of Australia warned in October 2019 the construction industry was going to experience a downturn (stock image)

The industry began to slow down and decline with approvals dropping by 41.5 per cent between November 2017 and January 2020.

The RBA prediction that the industry was about to take a hit appeared accurate.

Then construction picked up again when the Covid-19 pandemic arrived. 

Demand for renovations skyrocketed while the federal government poured billions of dollars worth of grants into the industry. 

The federal government launched the HomeBuilder program in June 2020 - allowing residents to access $25,000 to build a new home or renovate an existing one.




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More than 137,000 applications for the grant were submitted with $2.1 billion funnelled into the scheme as of March 2022.

Lockdowns also prompted homeowners to turn their attention to their existing homes and renovate them.

The Australian Bureau of Statistics showed Australians spent $12.3 billion on renovations in 2021, a 33 per cent jump on the amount spent in 2020.




The RBA warning came after the construction industry enjoyed a massive boom between April 2012 and November 2017





Dwelling commencements are also down 27.5 per cent since their peak in June 2021 (stock image)

The pace has slowed drastically with home building approvals falling 29 per cent since reaching their peak in March 2021.

Building commencements are also down 27.5 per cent since their peak in June 2021.

More than a dozen construction companies have collapsed over the past year. 

Builders Privium and BA Murphy were both liquidated late last year, while major construction companies Condev and Probuild also went broke earlier this year.

Inside Out Construction, slotid Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group, Pivotal Homes, Solido Builders and Snowdon Developments are some of the other companies in the sector to go under.

Skyrocketing material costs, choked supply chains, fuel and vehicle price hikes, difficulty finding staff, and high wages are all combining to destroy the viability of businesses. 




The Australian Bureau of Statistics showed Australians spent $12.3billion on renovations during 2021 (stock image)

Staffing costs also soared with some in-demand tradies and specialists being headhunted by rivals for twice their previous salary.

The industry was also hit with delays caused by Covid shutdowns and then the La Nina deluges stopping work on sites across the eastern half of the country for weeks on end.

Now companies up and down the country are committed to fixed cost contracts which are losing them money hand over fist.

The worst affected are the bigger companies with sales teams who booked in record amounts of business at prices they can't sustain, with profits smashed by the rising costs.