Inside the South Australian housing crisis and why seven builders went bust
The homeownership dream is on a “knife edge” for South Aussies with industry leaders warning thousands more unfinished houses could be at risk.
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Delays in shovel-ready projects, skyrocketing building and labour costs and the ever-expanding skills shortage are leaving South Australian builders on a “knife’s edge”, industry leaders warn.
They fear thousands more South Australians on fixed-price contracts could be left with unfinished homes if more construction companies go bust this year.
New figures obtained by The Advertiser show 3394 construction businesses across Australia entered administration in 2024, up from just 1571 a decade earlier.
Across the state 89 construction companies went bust last year, almost doubling across a 10-year period.
It comes as hourly wages for skilled trades people increased by 26 per cent in the past decade, contributing to a 44 per cent increase in the cost of building a house since the pandemic.
Master Builders SA chief executive Will Frogley said fixed-price contracts meant companies’ margins were much tighter.
“Over the past few years escalating costs made pricing work difficult,” Mr Frogley said.
“A common theme for builders that have gone bust is that their clients had fixed-price contracts and prices bolted after the contract was signed.
“The cost of doing business in general continues to rise.”
Mr Frogley said the situation could deepen if the state government didn’t free up key blocks of land in the inner south – such as St Mary’s and Clapham – for subdivision.
“Lack of shovel-ready land will be a major challenge for residential builders this year,” he said.
“The state government’s $1.5bn Housing Roadmap is a good plan but realistically those homes are a fair way off being built.
“We can’t just sit around waiting for all the roads, water and sewage infrastructure to be built – all other options to increase supply in the short term must be on the table.”
He warned if more companies went into administration the median house price, which currently sits at $795,000, would continue to climb – pricing more South Aussies out of owning a home.
It comes after a study found Adelaide was the ninth least affordable housing market in the world, beating out much larger markets such as Greater London, Toronto and Brisbane.
Specialist Contractors Association’s Larry Moore said the skills shortage, coupled with trades people working on more lucrative government projects, meant builders were under more financial pressure.
“With major projects, like the new Women’s and Children’s Hospital, there is going to be an outrageous increase in costs for that project because of the enterprise agreement and loading, which is $12 an hour extra on top of a tradesmen rate,” Mr Moore said.
“That causes a real vacuum of people rushing to get on that site for that sort of money, that then affects a small contractor or builder who might be doing housing.
“The prices of houses are just going to rise just on the back of the labour and skills shortage.”
He said the government should fast track migration of skilled workers to help meet demands.
“Some barriers need to come down, because there won’t be any skilled workers and it’s just going to get worse and worse,” Mr Moore said.
Here are seven SA builders that went bust and why.
Felmeri Homes
When Edward Gilmore signed the contract to build with Felmeri Homes, he and his wife Ataniah were expecting their first child Alexander.
Now, more than five years on, he is a father of two and has been forced to move into a bigger home, renting out the O’Halloran Hill house to family members after only getting the keys in June last year.
“By the time we moved in, we had two kids walking so it was no longer really fit for purpose like we had hoped,” Mr Gilmore said.
“What we were promised by Felmeri was a quick turn around, nice and smoothly, but it just turned out they had built the business on a house of cards.”
The state government was forced to step in and spend $4m to complete crucial roadworks at the development, allowing new builders access to the unfinished homes.
More than a year on, homeowners have been able to slowly move into their completed properties.
But it has come at a cost for the father-of-two, spending $30,000 out of his own pocket to fix defects, after agreeing to scale back his build in a desperate bid to get the job done.
“There needs to be greater protections in place when people are literally investing their life savings, it’s not a small purchase,” he said.
“Unfortunately because the process took so long, people couldn’t lock down interest rates as they kept on climbing, so there’s numerous people in the estate who have had to sell.
“The dream of owning a home hasn’t been achieved, purely through the inept management of Felmeri.”
Jess Harrison was another resident who had to fight tooth and nail to get her home finished, after years of back and forth with Felmeri.
It was only last year she got to the keys to her house, despite signing with them in 2020.
“People like me can’t afford to take these builders on through court,” Ms Harrison said.
“If the state government hadn’t stepped in to finish the road, we would still be waiting.”
She said the nightmare had an effect on her mental wellbeing, after having to fork out $2500 a month in mortgage repayments by herself while Felmeri dragged it heels with the build.
“It had a physiological impact, we were dealing with false promises and hope every day, which added to the stress,” she said.
“It was a huge burden, but we just want to get on with our lives.”
A liquidator’s report found that while Felmeri Group encountered “difficult trading conditions”, there was also “significant use of funds for non-business related purposes” and “poor strategic management”.
Although the liquidator found it was reasonable to suspect Frank Felmeri and his father Frank senior traded insolvent for a time and made misleading statements, ASIC has taken no legal action against them.
Mr Gilmore said his ordeal highlighted the need for a government-led rating system, which would allow prospective homeowners to get honest feedback on builders.
The collapse of the business was also felt on the Yorke Peninsula, after work on a $42 million resort stalled.
Developers of the Wallaroo Shores project claim they are owed $11 million by Felmeri Group after they went bust.
A new builder Tonkin Schutz Design Build has come to the rescue of the project, with work expected to be finished by September this year.
JAC Homes
Embattled builder JAC Homes went into liquidation in January, leaving nine homes across Murray Bridge, Mannum and Strathalbyn in an unfinished condition.
But the sudden collapse of the Murray Bridge-based builder left a lot more homeowners counting the cost.
First homeowner Ahmed Tayba and his partner Kelly will likely have to spend more than $50,000 to fix defects throughout their four-bedroom home.
“It’s a nightmare, it makes you not want to do it again,” Mr Tayba said.
“Builders need to be open and honest about what situation they are in and how many projects they have on,” Mr Tayba said.
“They overpromise, take your money and then don’t do anything.
“The last six months have been living hell, there’s been nothing but frustration, lack of communication and not knowing where we stand.”
He said the house required extensive repairs after the builder cut corners on their build.
“All of the internal walls have to be torn down and refitted with insulation, gyprock and paint,” Mr Tayba said.
“Half of our driveway has to be cut out so a drain can be put in properly.
“The hot water service isn’t plumbed properly so it’s leaking out and corroded.”
In a statement on its website, JAC Homes said it was with “deep regret” it was closing and the decision was “not made lightly”.
“After many years of proudly serving our clients and building homes with dedication and care, we have made the difficult decision to cease operations,” JAC Homes owner Jodie Austin said.
“Ongoing challenges and circumstances have significantly impacted our ability to continue operating, and the resulting stress has affected both the business and my personal wellbeing.”
Adelaide Designer Homes
Around 20 people were left with unfinished builds when Adelaide Designer Homes went into liquidation in August last year.
The Myrtle Bank-based business closed its doors abruptly, with more than 80 creditors left out of pocket.
Liquidators said the rising cost of material and labour post-Covid led to spiralling debts for the business.
It came after the builder was forced to sell its Glen Osmond Road head office in a last-ditch attempt to boost cash flow.
Qattro
SA builder Qattro collapsed in September 2023, owing more than $4.5m to unsecured creditors.
The construction company closed its door suddenly after 15 years of operation in the state, plunging the future of more 200 projects – totalling $110 million – into doubt.
The collapse came after several unsuccessful attempts to stay afloat.
Director Bradley Jansen said at the time Qattro struggled to bounce back after the pandemic.
“I have made significant changes to the company in the post Covid years, such as downsizing both operations and our office, but I have now exhausted all options,” he said.
“The reality is ongoing supply-chain and labour shortages mean that there is too much cash stuck on near-completed projects to meet the immediate obligations of the company.”
Qattro was building homes at the Cedar Woods Fletcher Slip Development and Dock One for Kite Projects, which has now been taken over by Xtraordinary Constructions.
Residence Building Group
It’s not just the bigger construction companies which have struggled to stay afloat, with boutique SA builders Residence Building Group going into liquidation in late 2023.
Then managing director David Menner said at the time fixed-price contracts were the reason behind its debts of more than $1m.
Seven homeowners were left with unfinished homes, with around 60 unsecured creditors owed around $500,000.
Stride Constructions
Struggling SA builder Stride Constructions entered liquidation late last year, reportedly owing up to $2m to unpaid subcontractors.
The decision has cast several taxpayer-funded projects into doubt, including $1.2m improvements on the Hope Valley Sporting Club, with a new builder called in to complete the project.
One contractor for Stride told The Advertiser at the time he was owed $180,000 and faced the prospect of remortgaging his house.
Wake Concepts
Around 100 staff lost their jobs after the collapse of commercial builders Wake Concepts in late 2023.
Established in 1982, the construction company was involved in the $1bn build of One Festival Tower, the Oval Hotel and the Ashford Hospital.
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