Metricon launches massive sell-off with dozens of display homes for sale amid collapse fears

Embattled construction giant Metricon has quietly put dozens of display homes worth tens of millions on the market as fears for its future mount.

Struggling construction titan Metricon has listed more than 50 display homes for sale as collapse fears continue to grow.

In May, reports emerged that Australia’s biggest builder was on the verge of ruin, as claims the company was facing serious financial problems spread.

Acting CEO Peter Langfelder has repeatedly shot down those allegations, but a question mark still hangs over Metricon’s future, despite the company injecting $30 million into its business to allay fears about its survival, company representatives meeting with the Victorian government for crisis talks about the escalating issues plaguing the sector and a rescue deal being struck with the Commonwealth Bank.

Those industry-wide problems have already seen Gold Coast-based Condev and industry giant Probuild enter into liquidation in recent months, while smaller operators like Hotondo Homes Hobart and Perth firms Home Innovation Builders and New Sensation Homes, as well as Sydney-based firm Next have also failed, leaving homeowners out of pocket and with unfinished houses.

Metricon has dozens of display homes for sale, including this one in Seaford Heights in South Australia.

The crisis is the result of a perfect storm of conditions hitting one after the other, including supply chain disruptions due largely to the pandemic and then the Russia-Ukraine conflict, followed by skilled labour shortages, skyrocketing costs of materials and logistics and extreme weather events.

The industry’s traditional reliance on fixed-price contracts has also seriously exacerbated the problem, with contracts signed months before a build gets underway., including the surging costs of essential materials such as timber and steel.

Now, publicly available data has revealed that Metricon has put 57 display homes on the market across NSW, Queensland, South Australia and Victoria.

In total, the homes for sale are worth around $65 million, with the homes – ranging in price from $650,000 to $3.2 million – all being listed within the last two weeks.

The company also has vacant land worth a combined $17 million on the market in Queensland and NSW.

Around two-thirds of the Metricon properties currently on the market are being sold with a leaseback arrangement, which means they would remain display homes, while the buyer would score a return of up to 8 per cent.

Mr Langfelder said in a statement that the sales were simply part of Metricon’s “natural cycle”.

“Metricon builds displays, sometimes they are then sold to investors who lease them back to Metricon for a period of time to use as display homes, sometimes they are sold without a lease when they are not needed anymore,’’ he said.

“This is how Metricon has always run its display program.

“The display fund group are selling a number of display homes as part of the natural cycle of the fund’s operations. The majority of the displays will continue to be leased by Metricon.”

Metricon’s acting chief executive Peter Langfelder has denied claims the company is in trouble. Picture: Kiel Egging

It comes after it recently emerged that Australia recorded a staggering 3917 liquidations or administration appointments across all industries during the 2021-22 financial year.

The construction sector led the charge, representing 28 per cent of all insolvencies, although firms from countless industries also failed in the face of soaring inflation and interest rate pressures, Covid chaos, labour shortages and supply chain disruptions.

There were 1536 collapses in NSW, with Victoria recording 1022, Queensland 665, WA 350, South Australia 196, 91 for the ACT, 29 for Tasmania and 28 in the Northern Territory.

According to consumer credit reporting agency Equifax, “small-scale operators in Australia’s construction industry could well be the canary in the coal mine for the difficulties that lie ahead for this sector”.

The company late last month claimed that “the significant increase in construction company failures since the start of the year shows no sign of abating”, with provisional data indicating that construction insolvencies increased 19 per cent for the month of May, sitting 43 per cent higher than May 2021.

Overall, construction insolvencies have increased 30 per cent over the last 12 months, according to Equifax.

Last month, research company IBISWorld confirmed that insolvencies are “trending upwards” in the House Construction industry, and predicted that house construction enterprise numbers will decline by 9 per cent in 2022-23, “contracting for the first time in a decade”, while NAB has stated that construction is now the “most worrying” industry in the bank’s portfolio.