Unfinished homes flood market amid construction strife and cost pressures
As construction costs skyrocket and companies crumble, homeowners are left in limbo forcing a wave of unfinished homes onto the market.
A spate of unfinished homes have been streaming onto the market for sale after the owners abandoned construction and renovation projects in the midst of skyrocketing building costs.
The unusual sales, including properties near completion as well as structural shells without windows or walls, have come as the building industry grapples with labour shortages and skyrocketing materials prices.
There was also a doubling in construction company insolvencies over the past financial year – the most recent of which was Victorian construction company Grandeur Homes, which collapsed leaving more than 100 homeowner projects on hold.
Louise Stewart, founder of construction technology group ProjectPay, said the insolvencies contributed significantly to incomplete homes being listed.
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“Homeowners can’t even claim on home warranty insurance. They’re left stuck – and there is nothing they can do,” she said.
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Many homeowners are left losing hundreds of thousands of dollars to the insolvency process, according to Ms Stewart, with homeowner’s left with no other option but to sell.
“The way it goes when these companies collapse is it gives the homeowner’s power away and steals their life savings.
“When the builder enters into administration (homeowners) can claim on insurance but it’s a very small amount, when this is likely the biggest investment in their lifetime.”
Many building companies had signed on to fixed-price contracts that were no longer viable with post-pandemic increased costs.
“All these poor homeowners having to sell these half built homes, they don't have the extra money to complete the build,” Ms Stewart said.
Homeowner’s budgets were alsoblowing outin a climate of sharp interest rate rises and inflated prices, the added pressure forcing homeowners to let go of their half-built home.
Housing Institute of Australia and ABS data revealed home building materials were up 34.5 per cent compared to the end of 2019, with the price of skilled trades having increased 30.4 per cent compared to pre pandemic levels.
Labour shortages were also listed as one of the biggest challenges for a quarter of Australian respondents in the most recent Global Housebuilder Survey.
Data from the Jobs and Skills Australia’s Skill Priority List show that bricklayers are in shortage nationally and across all eight states and territories.
Among the incomplete homes listed for sale in NSW was a luxury Connells Point build that had the majority of the structure complete yet was set to sell at auction on Tuesday October 8.
A Hill Top property has been “drastically reduced to sell,” listed with a guide of $970,000- $1.02m so close to being completed with floorboards, tiles, tapware and appliances already fitted.
In Guildford, a shell of a structure missing windows, doors and a roof, sold in June for $1.255m. An Annandale warehouse had been completely gutted exposing beautiful sandstone walls and timber floorboards, selling with a DA approved plans for a four bedroom home for $2.75m.
Additionally a Cooranbong five bedroom home had sold for $739,000 in May to “near lockup” condition.
The Property Council NSW noted that home completion rates were concerning, which was down from 11,525 to 10,776 in the previous quarter.
Property Council NSW executive director Katie Stevenson said that reducing government taxes that were adding up to 40 per cent to the cost of constructing new homes, could help alleviate pressure on Australians hoping to build homes.
“It’s already a tough environment for construction … the NSW Government can’t control all the costs preventing housing delivery, but one lever they can pull right now is to limit the impact of property taxes and charges stifling development,” she said.
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Originally published as Unfinished homes flood market amid construction strife and cost pressures