Two more Australian home builders collapse in WA

Another two building companies have collapsed in a matter of days, leaving homeowners in the lurch as their homes sit unfinished.

Another two building companies have collapsed in WA amid a huge crisis in the Aussie construction industry, leaving at least a dozen homes unfinished.

Perth-based boutique home builder Royal Construction and Design went into liquidation on Tuesday, August 8, according to a notice published by ASIC.

Just a few days later fellow Perth-based residential builder Western Luxury Homes also collapsed.

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Western Luxury Homes went into liquidation on Friday, with Travis Kukura and Jerome Hall Mohen of RSM Australia Pty Ltd appointed as liquidators.

The Alexander Heights builder, run by director Hetem Hajdari, was set up in April 2020 and rode the wave of the pandemic tradie boom, before becoming the latest construction company to falter amid huge pressure on the industry.

A dozen clients have been left with their homes incomplete. It is understood the 12 clients signed up with Western Luxury Homes in mid-2020.

The builder’s Facebook page, where it describes itself as a “leader in providing value-added construction services”, has been inactive for some time. Most of its posts have been made private and its website has been pulled down.

Western Luxury Homes had a partnership with fellow Perth builder Flexible Homes, which also went bust in June this year.

The state government watchdog, Building and Energy, advised affected homeowners to contact their home indemnity insurance provider, QBE Insurance, either to engage another registered builder to complete the work or to manage other remedies.

A semi in Wembley, Perth listed in Royal Construction and Design's portfolio. Picture: Royal Construction

The collapse of Western Luxury Homes came just a few days after another Perth-based residential builder, Royal Construction and Design, also folded.

The boutique builder, helmed by director Sayed Ali, of Wembley, went into liquidation on Friday after 15 years of experience in the industry. Malcolm Field of SV Partners was appointed as liquidator.

It is understood that liquidation came after the death of a key stakeholder.

A note on the builder’s website said it had “a number of exciting projects underway”. Almost 30 projects are featured on its website, including several significant multi-dwelling developments. One of them simply reads: “COMING SOON”.

One of the properties in Royal Construction and Design's portfolio simply reads: "Coming soon". Picture: Royal Construction.

The two companies join a growing list of failed Aussie construction firms, amid serious pressure on the industry.

ASIC insolvency statistics show 2213 building companies collapsed during the 2022-23 financial year — a 72 per cent increase on the previous 12-month period.

The alarming trend has been blamed on a “perfect storm” of factors, including fixed price contracts, escalating costs, supply chain disruptions and tradie shortages.

The previous Morrison government’s HomeBuilder grant, which was introduced in June 2020 and handed out $2.52 billion to owner-occupiers who wanted to build or substantially renovate a home, turbocharged the sector.

More than 130,000 customers signed on for the program, with many tradies agreeing to the work under fixed-price contracts that soon became unsustainable as prices began to soar.

Labour shortages also appeared, meaning the cost of hiring a tradie spiked. Add wild weather for much of last year, and many builders found themselves with a significant backlog of work that cost more and took longer than had been planned.

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Originally published as Two more Australian home builders collapse in WA