Home builder Porter Davis in liquidation with work on 1500 properties stopped

Families have been financially crippled and lost their dream homes in the downfall of building giant Porter Davis.

• Explainer: What customers need to know
• Fresh shockwave: Another Victorian builder collapses

Major home builder Porter Davis has gone bust with work immediately halted on more than 1500 properties across Victoria, with the majority of affected customers described as “mum and dad homeowners”.

And the Andrews Government’s Big Build project has been blamed for “pushing other housing and construction businesses out of the market”.

Insolvency experts Grant Thornton announced on Friday morning they had been appointed liquidators to 14 companies in the Melbourne-based Porter Davis Homes Group.

“The liquidators will not be trading the PDH Group companies and works on current builds will cease immediately,” Grant Thornton said in a statement.

“The liquidators are working urgently to determine if a solution can be found to support customers and some employees, including by engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts.”

Work has stopped on more than 1500 homes in Victoria.

The collapse into liquidation of Porter Davis follows the Herald Sun earlier this month revealing lengthy delays on builds across Melbourne earlier this month.

Reports had also emerged Friday morning that the home builder had stopped paying tradies.

The liquidators’ appointment is over all PDH Group companies operating in Victoria and Queensland except for Englehart Homes.

Englehart Homes continues to operate.

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Mark Anthony outside his half built house in Mitcham, which was being built by Porter Davis. Picture: Ian Currie

Young family left in ‘limbo land’

A heartbroken father-of-two says he is in ‘limbo land’ after his Porter Davis home remains half built in Melbourne’s east.

Mark Anthony told the Herald Sun he expected to be at a $1m loss over his unfinished Mitcham property.

“We are a young family and this was going to be our dream home, our forever home,” he said.

“It’s become our worst nightmare.

“We are beyond devastated. This has finally broken us.”

Mr Anthony, his partner Melissa and his two teenage daughters had been renting for three years while their two-storey home was under construction.

“We were so excited to move in,” he said.

“This has been going on since 2020 ... there was so much waiting, we forgot at times we were building a house.

“We are on a monthly renting contract but now we aren’t sure, do we sign up for another six months? We are just screwed.”

The motorcycle industry worker said he heard allegations about the company collapsing 12 months ago.

“About a year ago, there were rumours that this was happening but we brushed it off,” Mr Anthony said.

“We have tried ringing everyone and anyone at Porter Davis but unexpectedly their phones are off.

“The only contact we have received is a mass email that was sent to everyone.”

Louise Alberti said she was devastated about losing close to $200,000 on her Bundoora build.

“We have worked so hard to be able to build our dream home and now we are at a loss,” she said.

“We had just had a slab poured after so many delays last month ... had we delayed it another month we wouldn’t have a concrete slab on our land.

“I just don’t understand how they would take so much money from people knowing they weren’t able to fulfil the build.”

Chelsea Ewens said she was “p*ssed off” about the collapse after the framework for her first home went up on Friday.

“I blame Porter Davis and the federal and state government for letting the cost of living and everything else get so bad that companies like them can’t keep up with the grind,” she said.

“I’m pissed off and heartbroken ... we don’t know what to do next.”

Porter Davis “regret the current circumstances”

Porter Davis has more than 1500 homes under construction in Victoria and a further 200 builds in Queensland.

It also has 779 signed contracts with customers where building has yet to commence.

“The extremely challenging environment for residential home building has directly contributed to the PDH Group’s financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the group’s liquidity,” it said in a statement.

A Porter Davis home. The group had 470 employees.

“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the directors were left with no option but to place the companies into liquidation.”

Porter Davis has around 470 employees and was expected to turn over $555m in revenue this financial year.

Grant Thornton said impacted customers could look to register claims with the Victorian Managed Insurance Authority which provides insurance cover to homeowners if a builder collapses.

Home builders operating in Victoria are required to take out insurance with the VMIA.

The Grant Thornton statement said PDH Group board of directors “regret the current circumstances and that their efforts to secure a funding solution for the group could not be achieved”.

“They further acknowledged the group’s employees for their hard work and commitment to Porter Davis, and were hopeful that a solution could be found to support Porter Davis customers in completing their homes,” the statement said.

Opposition spokeswoman for home ownership Jess Wilson said the Porter Davis closure was a huge blow to housing affordability in Victoria.

Ms Wilson said the government’s Big Build project had pushed other housing and construction businesses out of the market.

“Daniel Andrews doesn’t care about helping Victorians achieve the dream of owning their own home,” Ms Wilson said.

“A serious fall in building approvals, combined with today’s news and the existing contraction of Victoria’s supply of new housing stock, is just making home ownership further and further out of reach for Victorians.

“Whether its taxes, interest rates, borrowing capacity or supply of homes – every housing affordability indicator is in reverse under Labor.”

Home builders have struggled under rising costs for more than a year.

Grant Thornton partner and head of restructuring advisory Matt Byrnes said the cause of the collapse was still being investigated, but cited labour shortages as a contributing factor.

“We need to report to creditors on that in due course, but I think it’s fair to say that the headwinds that people have been talking about that have impacted this sector have certainly impacted Porter Davis over the last 12 or 18 months,” Mr Byrnes said.

“We’ve seen rising input costs in their builds, we’ve seen difficulties in accessing labour shortages that have been well documented, and I think more recently – even where home builders have been able to build through unprofitable contracts in order to continue on – were sort of faced with a real fall away and a drop away in sales.

“That pipeline of new sales we expected to see has really fallen away – that’s an issue that’s not unique to Porter Davis, it’s really across the sector.”

Mr Byrnes said major government infrastructure projects also played a role in taking away resources from private builds.

“There’s no doubt that some of the contractors and the trades are being used on those projects, and that means that there’s fewer resources available for resident residential construction.

“It certainly could be a factor.”

Mr Byrnes said Grant Thornton had engaged with relevant insurance authorities in both Victoria and Queensland, and was planning to run a webinar with affected Porter Davis customers “to explain the situation” next week.

“We’ll certainly talk to the Victorian Managed Insurance Authority and get an update from them prior to that so that we can present our position to the customers as well,” he said.

Of the more than 2000 Porter Davis customers affected, Mr Byrnes said a majority were “mum and dad homeowners”.

He said Grant Thornton was “having a number of conversations with other builders” who might be able to step in and take over Porter Davis builds that are already underway.

“That’s a process we’re urgently looking into and it might be that we can find a solution for some of the Porter Davis homes where the owners have some continuity – they have a new reputable builder who can step in and complete the builds for them” Mr Byrnes said.

“I’ve got to say that’s not going to be the case of all the Porter Davis homes. It’s simply not going to be achievable.”

The majority of customers affected by Porter Davis’ collapse are ‘mum and dad homeowners’.

Home builders have been hit with a storm of rising costs, fixed-price contracts and supply chain issues over the past 18 months.

Metricon held emergency talks with the state government and its owners tipped in $30m to shore up its balance sheet last year amid concerns about its financial position.

Industry group Master Builders Victoria said the collapse was stressful for people with homes under construction and it was hoped that other builders would step in to help.

MBV policy director Megan Peacock said the industry was under great pressure.

“The residential building industry has experienced unprecedented strain through supply shortages, fixed price contracts, inflation and now interest rates, as well as labour and skills shortages,” she said.

“We know that building activity is now coming off and the residential market continues under that strain, and while we are a very resilient industry those factors have really put a strain on the industry.”

“We understand that this is really stressful for consumers and we’re hoping that there will be other builders that are willing to step up to help with that shortfall and to get those homes built.”

Industry players told the Herald Sun on Friday Porter Davis’ woes had been exacerbated by additional regulatory requirements associated with the implementation of seven-star energy efficient homes from October.

They said mandatory minimum standard under the National House Energy Rating Scheme is expected to add up to $30,000 to the cost of a typical build for homebuyers, while builders would also face additional logistics costs as they moved towards having to implement assessment tools for the new home requirements.