Oracle Homes collapse leaves hundreds in the lurch, but what’s the odds for building a home?

Hundreds of homeowners were left with unfinished homes when another construction firm collapsed this week, and more insolvencies are expected. So what is the prospect of building a house?

About 300 policyholders are eagerly awaiting support after Oracle Platinum Homes went into voluntary administration and owed about $14 million.

Master Builders Queensland chief executive Paul Bidwell said he was confident there would be “pain” for the Queenslanders involved, but “their homes will eventually be built”.

Oracle is just the latest of dozens of construction companies that have foundered amid the loss-making construction boom.

Bidwell said trade and material shortages and cost increases were still affecting all sectors of the industry, but there were pockets of improvement.

“There is no clear indication that the situation will return to something more manageable until the second half of 2023,” he said.

“Some builders say, ‘Look, we think we’re aware of all the material price increases,’ others say, ‘Far from it.'”

Builders Association of Australia chief executive Jon Davies said that in a 12-month period contractors had seen price increases of up to 70 per cent, but were required to set prices well in advance.

A man with short gray hair sits at a computer in an office.
Jon Davies asks for compensation for price increases.(ABC News: Curtis Rodda)

“Why should anyone pay less for something than the actual cost if this happened through no fault of the contractor, other than not having a precise enough crystal ball?” he said.

“Really, the government can lead the way here and look to compensate contractors for these price increases.

“That money is then fed down and out through the complex networks of vendors and consultants.”

Cash flow problems fade

Housing Industry Association chief economist Tim Reardon said most of the cash flow problems facing the industry had been left behind and material shortages had eased, but the challenges were not they were done.

“What we’re seeing right now is that the cash rate increase that started in May is starting to kick in, and we know that the cash rate increase will cause the market to slow down,” he said.

A man with glasses, short hair and a neat beard, dressed in a business shirt.
Masters Builders CEO Paul Bidwell says the industry still faces a lot of uncertainty.(Supplied)

Mr. Bidwell believed that builders were more used to dealing with such issues than they were 18 months ago, and were hopefully communicating higher costs and timeframes to clients to allay concerns.

“But ultimately consumers will vote with their feet,” he said.

The volume of homes under construction is expected to decline over the next three years, but will remain above pre-pandemic levels.

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