Construction firm collapses to drive up home building costs says Mirvac boss

Mirvac Managing Director Campbell Hanan. Picture: Nikki Short, NCA NewsWire

Mirvac Group chief executive Campbell Hanan says the collapse of almost 7000 builders and subcontractors in the last three years is weighing on developers, triggering rising costs to create new homes at a time of a national accommodation shortage.

Speaking on the sidelines of the Macquarie Australia Conference in Sydney on Tuesday, Mr Hanan said building costs were “one of the great challenges”.

“We have seen close to 7000 insolvencies in three years. That is a really significant event for a market to work its way through,” he said.

“The fact that you have wonderful tier one builders losing money, still, four years after Covid, that is a sign that things have to correct in a certain way.

“I think ultimately, the cost of building everything, in every asset class, is going up, and going up for a period of time.”

His comments come after national builder Roberts Co placed its Victoria business into administration this year before the entire company was offloaded for a nominal sum.

Meanwhile, one of the country’s largest builders, Multiplex, last week posted a $122m loss, according to accounts lodged with ASIC, and Probuild collapsed after the pandemic.

Builders were moving to the tail end of infrastructure construction that was happening during the global pandemic from 2020 to 2023, but the higher building costs came as Mirvac was working to sharpen it focus on residential construction and more construction of modular homes.

Mirvac derives a significant portion of its development revenue from the residential sector, with a residential development pipeline of about $19bn as it pushed into the build to rent and land lease community space in recent years.

Mirvac reiterated plans to take 100 per cent ownership in the future of its Serenitas land lease community business, buying out Pacific Equity Partners, after the pair purchased the business in 2023 with Pacific Equity Partners, with Mirvac currently owning 47.5 per cent.