Chris Rowe at Accommodation Business Brokers Appointed To Sell The Famous 1860's Historical 

Western Hotel at 93-95 Cambridge Street, Mitchell, Queensland, Australia 

93-95 Cambridge Street, Mitchell, Queeld, 4465 for sale for $2,950,000

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Chris Rowe has been involved in the Accommodation and Hospitality Industry for many years. 

Chris Row has established strong long lasting relationships with his clients.

Jack Needham

                               Buyers agent Cate Bakos says delaying a  purchase to see if prices fall further has its risks.                               https://www.realestateview.com.au/news/national/house-prices-are-falling-so-should-you-hold-off-buying-this-spring/?utm_source=theweeklyview&utm_medium=email&utm_campaign=twv-sep10-2022  

               Regional property values are declining, but buyers  holding off purchasing in an attempt to time the market and buy when  prices are at their lowest are being warned their plans could backfire.              

               Cate Bakos, buyers agent and president of the Real  Estate Buyers Agent Association (REBAA), said that picking the bottom of  the market was notoriously difficult.             

               "Timing the market is challenging because even those at  the coal face, or those with breaking economic data at their fingertips  can't pinpoint when a market bottoms. We can only note when it has  turned," Ms Bakos said.             

               Buyers questioning whether to take a break from the  property hunt this spring in order to see what the new year would bring  would need to ascertain what their priorities were when it came to  buying property.              

               "The question for buyers to ask themselves is: "how does  the thrill of perfectly timing the market compare to the pain of being  priced out of the market?," Ms Bakos said.              

               "The upside to getting this right includes the avoidance  of negative equity, and potentially a huge capital gain when the market  rebounds," Ms Bakos said.              

               "However, the downside relates to missing the bell. If  buyers are waiting for the bottom of the market and happen to miss the  bell, they will find themselves competing in a recovering market with  plenty of opponents rallying for the same properties.             

               "Over the past periods of market downturn, sadly I've  seen active purchasers opt to be bystanders in the hope that they could  capitalise on a falling market, but when they've missed the bell, some  have found themselves priced out of their desired suburb entirely. It is  a bitter pill for buyers to swallow when they can no longer buy in the  neighbourhood they could have once afforded."             

                               Buyers agent Jack Henderson warned that  circumstances can change dramatically in the space of a year. Picture:  Champion Creative Media                         

               Buyers agent Jack Henderson said that the other issue  associated with waiting to buy was that a change in personal  circumstances could risk access to finance.              

               "Your life can significantly change between now and 12  months time. So we're in a position to be able to purchase right now,  but you may not be in 12 months time, right?"             

               So there's so many variables at play - I'm a big  believer in if you've got the capacity to do it right now [you should do  it now]."              

               Mr Henderson said that purchasing a property should be  treated as a long term proposition, limiting the impact of short term  value fluctuations on the property's eventual sale value.              

               "If you're going to hold the property for, you know, the  next five to 15 years, whether you buy the property today, or you buy  it in six months, or 12 months time, in the grand scheme of things, it  doesn't really matter [what values do in the short term]."             

                               Peter Nay is currently on the hunt for an investment property. Picture: Supplied                          

               One buyer who isn't waiting to see what happens with  property prices is Peter Nay, who has engaged Mr Henderson to assist in  searching for an investment property in either Newcastle or Sydney's  inner west.              

               Mr Nay, who is based in Sydney and runs a digital  marketing agency, said that he was looking to purchase his first  investment property after his business had undergone a period of growth.               

               He said that he was yet to be affected by rising  interest rates, and was more concerned with what a property would do in  the long term than any short term performance.              

               "So for me, it's not about you know, whether interest  rates go from three to five, or if the market pulls back two or 3 per  cent this year, or whatever, because, again, like I'm not looking, if I  do go through and purchase something ... I'm not looking to get rid of  it next year or the year after the year after, I'll buy it for the long  term."             

               "I'm not in the game to flip properties. I'm not a developer, I'm not a builder."

               Mr Henderson said that buyers in the current market  would have the upper hand when it comes to negotiations, but it was  important that that they weren't tempted by properties with major price  reductions.              

               "Where people go wrong in these marketplaces, is they're looking for 

a  bargain, as opposed to looking for the right property. So everyone  wants a bargain, right. But in my experience ... and what I tell clients  is, if you're getting a bargain, it's probably not a good thing,  because it means no one else wants that property," he said.

               "So good quality properties in any marketplace,  including this one, are still selling extremely well, there's still  records being broken, there's still properties that have got 10 to 15  registered bidders on them. They're the properties that I want to be  buying, because I know regardless of market conditions, there's always  going to be a strong buyer demographic for that property."

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Jack Needham

New  figures have revealed that the cost of building a home has jumped by a  whopping $76,000, which means more construction firms will “hit the  wall”.

The cost of building a  house skyrocketed by a record $76,715 in April as supply chain and  labour shortages continued to bite, with alarm bells sounding that more  construction firms will collapse in the coming months amid soaring  prices making fixed price contracts unprofitable.

It comes  as the number of construction companies going under this year has  accelerated, with predictions that huge jumps in prices will not ease  and are set to continue into the next financial year.

The $76,000  increase in building also means for the first time the national average  value of new homes approved has jumped over the $400,000 mark at a time  when house and land packages were seen as an affordable entry point for  first home buyers and families.

Economist Maree Kilroy said the huge backlog of work and global commodity price increases will continue to hit the industry.

“Pressure  being faced by home builders is not set to abate in this environment,  and we expect more builders to hit the wall, especially less capitalised  small-to medium-sized operators,” she told the Australian Financial Review.

The construction sector has been hit by a wave of construction firm collapses this year shaking confidence in the sector.

Tradies leave Probuild sites. Picture: NCA NewsWire / Dan Peled

In February, building giant Probuild sent shockwaves through the industry when it went into liquidation, followed by Gold Coast-based firm Condev, while Australia’s largest home builder Metricon was recently thrown a $30 million lifeline to keep the struggling business afloat.

Smaller operators have also fallen over including Hotondo Homes Hobart, Home Innovation Builders and Sydney-based Next, while staff at Queensland builders Pivotal Homes’ were all terminated on the spot last week.

Over the weekend, Queensland construction firm Solido Builders also revealed it had sadly appointed liquidators.

Experts have agreed that the construction industry’s horror run means it is most at risk for more insolvencies.

Russ Stephens, co-founder of the Association of Professional Builders, has estimated around 50 per cent of Australian building companies are currently trading insolvent – which means they can’t pay their bills.

Condev building sites on the Gold Coast. Picture: Nigel Hallett

National  Australia Bank chief executive Ross McEwan has said construction was  the “most worrying sector” for the bank’s loan book.

ANZ chief  Shayne Elliott has described the construction industry as a “fragile  sector”, adding that business were struggling to pass on higher costs  were also more at risk of failure in a downturn.

“The business  model has moved towards a fixed price contract model. The problem with  that is that when you end up with cost shocks or labour shortages, the  business can’t pass it on,” he told an Australia-Israel Chamber of  Commerce lunch.

“So you are in this weird situation, which is sort  of counterintuitive: construction is booming, and construction  companies are falling over.”

It comes as the Australian Bureau of  Statistics showed dwelling approvals were well down from April 2021  levels with a 32.4 per cent decline.

From March to April new  dwelling approvals also fell by 2.4 per cent to 14,908 – outstripping  economists expectation of just a one per cent dip.

ANZ chief executive Shayne Elliott. Photographer: Adam Yip

JP  Morgan economist Jack Stinson predicted building approvals will  continue to plummet as interest rates rises and house prices fall.

The  end of the federal government’s HomeBuilder grant combined with  significantly rising costs in the construction sector will continue to  cause a steady decline in building approvals throughout 2022, added  CreditorWatch’s chief economist, Anneke Thompson. 

“Most builders  and subcontractors are at workload capacity, and poor weather in NSW and  QLD exacerbated by the late delivery of building supplies across the  country has delayed many existing projects, reducing the capacity for  future approvals,” she said.

A Metricon building site. Picture: Mark Wilson

Rising  interest rates will also have a knock on effect for demand for new  homes, although this could help cost and capacity pressures plaguing the  industry, Ms Thompson added, although other experts have argued a lack  of building pipeline could financially cripple companies.

“It may also help reverse the growing number of construction  companies unable to meet payment deadlines. 

Creditor Watch data has shown  the sector is a repeat offender when it comes to late payment time,”  she said. 

Its data has shown 12 per cent of construction  companies average more than 60 days in payment arrears which has seen  contractors focusing more on government contracts where their pay  cheques are certain, also impacting available builders to complete work.

‘Really bad’: Construction chaos imminentChaos as 18 Aussie companies go bust  

A  builder insider has revealed that outrageous price gouging is  contributing to the instability in the industry as costs blow out by up  to $100,000 per job.   

A building insider, who  works for one of the largest construction companies in NSW, has warned  the situation in the industry is only “going to get worse” after a  string of collapses in the sector, as the price of building homes blows  out between $40,000 and $100,000.

Mark’s* employer builds  between 450 and 500 homes a year but he said “outrageous” price gouging  from suppliers has helped send the average price of a house in NSW up  from $330,000 to $440,000 in the last 12 months.

“This is really  bad, especially in NSW. What has hurt just as much as Covid is the rain –  it’s the final dagger on top of all these price increases that don’t  seem to end no matter how strong a relationship or size of builder you  are,” he told news.com.au. 

“The saddest part is it’s mostly Australian manufacturers taking advantage of the lack of import plus supply and demand.”

Condev building sites left quiet after its collapse. Picture Glenn Hampson

With  15 years experience in the building industry, Mark said customers have  always demanded fixed price contracts and up until recently that wasn’t a  problem.

“We have always been able to fix our prices with our  suppliers for 12 months to two years previously, but now we are not  seeing that. Suppliers are breaking agreements, they are coming to you  with extraordinary price increases and compounding increases,” he  revealed.

“Steel and timber is up over 60 per cent, anything that  was imported so your bathroom ware and appliances up are 15 to 20 per  cent and then throw in the labour side, the trades, bricklayers and roof  tilers are demanding 50 per cent more easily and that’s just to keep  them on your site. 

“(Tradies) know they can easily walk off the  job – forget about loyalties – they will walk off site and take more  money for a retail job or another builder job for a week as they know  there is nothing we can do. 

“As a builder we have lost all our  leverage and that’s when it becomes dangerous, it’s the start of  something really bad and scary.”

Sub-contractors  and tradesmen pack up their equipment and walk off the 443 Queens  Street construction site in Brisbane after giant Probuild collapsed.  Picture: Dan Peled/NCA NewsWire

He added it’s  insulting that manufacturers and suppliers are “publicly bragging about  profits” and it “hurts” when building companies are “begging” for  support and prices to be fixed but instead are hit with “big increases”.

Mark said consumers are the ultimate losers from the situation.

He  revealed a single storey house has jumped in costs by between $40,000  and $50,000 in the past 12 months and for a double storey it has risen  by $60,000 and $100,000.

He added Australian family businesses are  the ones that will suffer and he is hearing stories of businesses  handing back contracts and pulling out of display villages.

“Builders  are not here to gouge clients, the fact is they if don’t get more money  they might not be here to finish a house and if customers go elsewhere  they could pay an extra $100,000 to $120,000 to get the house finished,”  he said.

Building home costs have blown out between $40,000 and $100,000 in NSW. Picture Glenn Hampson

‘It’s insane’

A  number of well known construction companies have collapsed this year  and it sent shock waves through the industry with millions owing to  creditors, but there are warnings it’s only the “tip of the iceberg”.

Two major Australian construction companies including Gold Coast-based Condev and industry giant Probuild have already gone into liquidation this year, alongside smaller operators like Hotondo Homes Hobart and Perth firms Home Innovation Builders and New Sensation Homes.

High  rise builder ABG Group also went into liquidation last year too, as  well as Queensland outfit Privium Home which impacted more than 2000  home buyers and left creditors owed close to $43 million.

“The  builders you are seeing going under now are the tip of iceberg, but the  cash flow impact on builders is severe. There’s the rain, no margin in  their jobs, they are probably not making money on a lot of homes built  in the next 12 months and they will be lucky if they don’t lose money,”  Mark explained. 

“That’s the goal to just not lose money, to break  even so we can keep the lights on, keep staff on and finish homes and  try and recover after that.”

Condev is one of multiple builders that have gone under this year. Picture Glenn Hampson

Builders  aim to make 20 per cent gross margin so on a $400,000 home that’s  around $80,000, Mark said, although staffing and rent has to come out of  that figure too.

“There are not many builders making money at the moment – we are building them for practice and survival really,” he said. 

“I  know a number of builders calling clients that are in contract and in  tender and they have to see if they will accept an increase that they  are not legally entitled to. But owners of businesses are calling  clients saying they might not be able to finish house otherwise and need  a $50,000 increase, it’s insane.

“It’s desperation. And on the  same day a large builder goes bankrupt, the government hands out million  dollar grants to manufacturers reporting record profits. Work that  out.”

Mark said builders were desperate and not many were making money at the moment. Picture: Nigel Hallett

Shocking rise in liquidations

Just  two weeks ago, another construction outfit went under with $15 million  in unpaid debts. Sydney-based builder Next, which specialised in aged  care, student accommodation and hospitality and hotel projects, blamed  recent flooding in NSW, labour and material shortages and project delays  from Covid-19 as the reason it went into liquidation, reported The Australian.

Dozens  of trades and other unsecured creditors were left owing $5 million,  while employees were left short of $400,000 in entitlements although  liquidators said it was a reasonable prospect they would see their  money.

Next had been working on $35 million student accommodation  project in Kensington in Sydney’s southeast, which is now in limbo, as  well as a 100-bed aged care facility near Penrith.

Construction  insolvencies were 28 per cent higher in March compared to last year in  Australia, while the first quarter of 2022 has seen 270 construction  companies falling into liquidation, according to credit reporting agency  Equifax.

Tradies have been badly impacted by construction company collapses. Dan Peled/NCA NewsWire

Scott  Mason, general manager of commercial and property services at Equifax,  said there is a hidden crisis as a result of the construction industry  woes.

“Rising costs, disrupted supply chains and periodic  lockdowns have created a profitless boom, with many construction  companies committed to projects that are no longer financially viable  thanks to major price increases for building materials,” he said.

“While  big name collapses like Probuild and Condev have recently been in the  news, what doesn’t often make headlines are the impacts of these events  on the small businesses that make up the bulk of construction companies  in Australia. 

“According to Equifax data, directors in building  construction and construction services are 30 per cent more likely to  have mortgage arrears than the average consumer, while proprietors in  building construction are 80 per cent more likely, and those in  construction services are 100 per cent more likely to have mortgage  arrears.”

He said the shocking statistics show the far-reaching impacts of insolvency.

“The flow-on effects to the whole ecosystem of suppliers and the people behind these businesses often go unseen,” he added.

Construction insolvencies were 28 per cent higher in March compared to last year. Picture: Nigel Hallett

The impact on tradies

Les Williams is no stranger to the flow on impacts of construction company collapses. 

He  formed and heads advocacy group Subcontractors Alliance and runs his  own business WK Civil, which lost $800,000 alone from a builder’s  collapse back in 2013.

He said subcontractors supply around 75 per cent of the labour, materials and machinery to the building industry. 

“As  a consequence they provide millions in unsecured credit to builders and  have to pay for the privilege. Tell me in what industry or sector that  much credit is given on that basis? The bank doesn’t pay you to take out  a home loan,” he told news.com.au.

“Most builder business models are akin to Ponzi schemes whereby today’s income pays yesterday’s debt.”

He believes Queensland and Western Australia are the “worst hit” by builders going into liquidation.

Les Williams of the Subcontractors Alliance.

The  Queensland-based subcontractor said there had been around 90 builders  collapse in the Sunshine state since 2014 and claimed most traded  insolvent for extended periods but had compliant building licenses.

“Materials  supply delays and associated price rises have caused havoc with  builders mostly all undercapitalised and not able to cope causing  collapses. But it is the subcontractors who bear the brunt,” he said.

“In my opinion given the implications of Covid – material delays and price hikes were entirely predictable.

“The  federal government made temporary changes to the Corporation Act around  insolvent trading and safe harbour laws but failed to include mandatory  rise and fall clauses to protect the industry from delays and price  hikes. That put subcontractors in harms way. The winners are  developers.” 

Mr Williams was also scathing of builders  associations, who he claimed “have sat on their hands and failed their  members” by not demanding developers accept their fair share of this  risk. 

“It is also a failure of all governments including the Federal Government,” he said.

“To  add insult to injury, the Federal Government stimulated the housing  construction market creating, which only created more problems because  builders enter into fixed priced contracts to sustain their business  models, work on razor thin profit margins to obtain work and then get  caught but pass the debt to subbies.”

Workers leave the Probuild worksite on 443 Queens Street in Brisbane. Picture: Zak Simmonds

Broader risks for the economy

A  healthy construction industry is vital to a strong economy and ongoing  growth, with the sector accounting for the employment of almost 9 per  cent of Australian workers and 7.5 per cent of Australia’s GDP,  according to reporting bureau CreditorWatch.

“A crisis in the  construction industry has the potential to flow through to wider  industries,” said CreditorWatch chief economist Anneke Thompson. 

“The  importance of the sector to the economy cannot be limited to the  physical build itself, but the ongoing financial benefit the end product  provides. 

“Failure to build enough hospitals, schools, roads and  houses now because the industry is in crisis, will damage employment  and economic growth years into the future.”

Increases in  construction tender prices across Australian capital cities is expected  for the next three years, Rider Levett Bucknall’s Tender Price Index  Series has also showed.

Hobart  couple Roxy and Lachlan Goss shelled out their life savings for their  dream home – but what they were left with has ruined them.

A Tasmanian couple say  they have forked out $260,000 only to be left with a wall and partially  built garage after the collapse of Hotondo Homes Hobart. 

Roxy  and Lachlan Goss, who have a three-year-old son and 15-month-old  daughter said they were promised their dream home would be completed by  June 2021, but now more than seven months later, it’s still a building  site.

Ms Goss, 27, said they had paid amounts between $5000 and  $10,000, before sinking a final $216,000 into Hotondo Hobart to get the  project moving. 

But despite this huge financial outlay, next to nothing has been completed.

“We  had paid well past lockup stage and we were left with basically one  wall and the garage was concreted and that’s it,” she told news.com.au.

“As  of now we have had no communication from anyone on the Hotondo team  whether that be higher up or office admin, so we have not got answers.

“I  don’t really know where we go from here but we are a young family, it’s  just my partner and I and my two kids and we were supposed to have this  house before my daughter was born.”

Roxy  and Lachy Goss with their children Nya, 15 months, and Ry, 3 years, at  their unfinished home at Granton. Picture: Chris Kidd

She  said the news of the collapse was shocking and completely “blindsided”  the family, with her 29-year-old partner now having to work two jobs to  support them.

The mum-of-two said the family has no money left to continue building the home, predicting a “difficult” year ahead.

“I  am very torn at the moment. I didn’t ever expect that this would be  happening to us. I think that I was very shocked to begin with and it  took me a long time to process that my dream house is not going to work  out the way I wanted to,” she added. 

“I think that I am feeling  very failed as a person to be able to provide a home for my kids and  very upset not knowing when I will be able to finish the build on this  place.”

Roxy and Lachy Goss don’t know how they will finish the house. Picture: Chris Kidd

The  family’s struggle comes as two former franchisees have hit out at  Hotondo Homes Australia accusing the major building company of offering  no support while still taking thousands in fees, after the collapse of  its Hobart branch left 40 customers out of pocket and with unfinished  homes.

They claimed that Hotondo head office would have known the  Hobart franchisee was in trouble weeks before it went into liquidation,  however Hotondo Homes Australia has insisted it only found out in late  December.

On January 4 this year, the Hotondo Hobart branch  collapsed, with a liquidators’ report showing that there is $1.33  million owed, but at least $1.2 million is outstanding to unsecured  creditors.

The collapse has left many families out of pocket and without homes.

Half completed Hotondo Home in Kingston in Tasmania. Picture: Linda Higginson

Put off building forever

Nick  and Amber, who did not want their surnames to be used, are another  young family that planned to build their dream home with Hotondo’s  Hobart branch but instead have lost almost $21,000 with the collapse. 

Nick said some of the money for their deposit came from cashing out long service leave from his fire protection job.

The couple also recently became parents with Amber, who works as a nurse, giving birth to a baby two months ago.

Nick said he had to hound the office for updates on the build with not much done after signing on in March 2021.

He  got a tip-off from a builder friend the week before Christmas that the  Hobart franchise was in trouble, but said he couldn’t get any answers  from the branch or Hotondo Australia head office.

The 28-year-old said the couple were “distraught” by the news.

“It makes you feel pretty sick when you aren’t getting any straight answers,” he told news com.au.

“When  I first found out I was just manic. It was lucky I was on long service  leave as I was sending so many emails and phone calls and it was taking  up my whole day on top of trying to support bubs.”

He said he rang Hotondo’s head office three days in a row when it first reopened in January but never had his calls returned

Half completed Hotondo Home in Kingston after Hotondo goes into receivership. Photo: Linda Higginson

It  wasn’t until he sent an email with stories from the Mercury newspaper  and screenshots from Facebook to Hotondo head office, telling them their  name was “mud” in Tasmania that he got a response.

“Being a  massive franchisor I thought they surely want to uphold their name, but  they have basically left it all to the liquidators from all the emails,”  he said. 

“It looks pretty grim, it doesn’t look like we are going to get anything out of it all and I’ve lost hope.”

Nick  said the home had been their first big purchase together as a couple  and they were so excited, but they have been completely turned off  building. 

“I’m not going to be able to build again for a long time now and especially with prices having gone up,” he noted.

“There  is $35,000 we have missed out on grants and the $21,000 deposit and on  top of that the cost to build a house in Tassie in six months has gone  up substantially and we can’t afford to build the house we wanted six  months ago.”

Building industry insiders raised concerns in December that Hotondo Homes would be going under. Picture: Sue Bailey

No builder will take on the work

Another  Tasmanian family, who have a daughter with a disability, said they have  lost more than $30,000 and have nothing to show for it other than a  development application from their local council, despite being told the  home would be completed by November last year.

Peter, who did not  want his surname used, said he receives a disability support pension  while his wife works part time and the family sunk their life savings  into building a new home with Hotondo Hobart.

“There isn’t a  builder or company in Tasmania who is prepared to build our home that we  contracted to build with Hotondo in March 2021,” he said. 

“We  are homeless and simply do not know what we will do. We are faced with  either having to start all over again, building a smaller home or  selling our block and try to get back into the inflated Tasmanian real  estate market.”

Nathan Meyers and Jayne Dillon were also impacted by the collapse. Picture: Chris Kidd

Reasons for the collapse

Hotondo  Homes Australia blamed a mix of supply and labour price increases, high  demand from government Home builder grants and delays in material  availability as factors that led to the Hobart branch becoming  insolvent.

The national company added that the events unfolding in Tasmania were an “isolated case”.

“As  a franchise network, every Hotondo Homes builder operates independently  of each other and as such, are not involved with the Hobart  franchisee,” the company told The Mercury.

“This is not a  trend. Builders are navigating unprecedented spikes in the cost of  materials and labour, widespread shortages in materials and trades,  council delays and other ongoing impacts of the Covid-19 pandemic and  current industry environment.”

However, news.com.au is aware of seven Hotondo Homes franchisees that have gone into liquidation in the past 10 years.

Hotondo  Homes Australia said it became aware of issues with the Hobart branch  in late December before commencing work “with our franchisee on their  building workflow and financial status” and then being advised on  January 7 that a liquidator had been appointed.

Half completed Hotondo Home in Kingston after Hotondo goes into receivership. Picture: Linda Higginson

‘Absolutely dreadful’

But  two furious former franchisees, who signed up to five-year contracts  with the major Australian builder, have alleged head office would have  known something was wrong with the Hobart branch when the bills weren’t  paid.

A report from the appointed liquidator Revive Financial,  lists Hotondo Building as a creditor, which is owed $115,370, and  liquidator Jarvis Archer said he believes it is related to the national  Hotondo office as the franchisor.

The former franchisees, who  forked out tens of thousands to sign on but did not want to be  identified, told news.com.au that the experience with Hotondo Homes  Australia was “absolutely dreadful” and left them “broken”. 

They were required to pay monthly fees of between $1300 and $1600 and up to 4 per cent on every building contract.

Neither were surprised by the collapse of the Hobart franchisee.

Both  franchisees, who had worked in the building industry for years, said  despite promises of support from Hotondo Homes Australia with systems,  business development and sales leads, there was “very little” help.

A Hotondo Homes worksite in Lindisfarne in Tasmania sits seemingly abandoned. Picture: Kenji Sato

It became non existent when they needed it most when Covid hit, they added.

Based  on the east coast, both were led to believe that once they went live on  the Hotondo website there would be an “avalanche of inquiries and  leads” but this was not their experience, with just a handful of  customers sent their way.

“Hotondo has literally the most horrid  toxic work environment I have ever seen with a turnover of 15 to 20  staff a year,” one man told news.com.au.

“When we were doing our  original training, one of the employees who was helping took us into  conference room and said working there was like being on Survivor and it  was about who is going to be voted off next and that was literally  coming from a staff member.

“There’s no chance to give support to franchisees as they can’t keep their own staff.”

News.com.au reached out to Hotondo Homes Australia multiple times for a response to the claims but did not hear back.

Franchisees ‘close to breakdown’

Both  the Hotondo Homes franchisees said they were lucky to continue in other  jobs while running their business, which helped keep them afloat with  the money from their salaries, with one even going so far as to “beg and  borrow” funds from family.

“If I didn’t follow my gut and stay  with the business I was working with … and I was on north of $130,000  because of all the overtime … we would have gone bankrupt,” the man  said.

“Hotondo sign you up and put their name on door so they get the brand presence and don’t do anything to help you from there.”

Half completed Hotondo Home in Kingston after Hotondo goes into receivership. Photo: Linda Higginson

“I  refused to pay them in the end and said I was not giving them  anything,” he admitted. “The sad thing is I’ve done the wrong thing as  the franchisee in terms of the agreement but it’s only thing can do you  can do, it’s the only power you have.”

The former franchisee said he got pretty close to a breakdown at one stage, was drinking too much and his marriage suffered.

The other said he was still $100,000 in debt from the experience.

“Once Covid hit, the support totally fell away and as far as I was  concerned I wasn’t important as I wasn’t bringing money into the kitty  and the way I looked at it, they just didn’t care,” he added. 

News.com.au approached Hotondo Australia multiple times for comment.

‘A lot of nervous builders’ as another major supplier collapses Warning signs: Builder collapses on the rise

Published: June 20, 2022  

If you’re building or renovating a home, and frustrated with huge delays, you’re not alone. 

Australia’s builders are struggling to find timber. For items such as  laminated veneer lumber – used for frames and beams – they’ve reported waiting up to four months. For trusses – used to build walls and roofs – up to nine months.

Fears these shortages could send builders bust have been exaggerated,  but the pain of delays and escalating price is real enough for tradies  and clients.

There’s no easy fix to this crisis. It has been caused by the  confluence of four factors: government stimulus for the building  industry; increasing reliance on imported lumber; the pressure placed on  global shipping by the pandemic; and the effect of Russia’s invasion of  Ukraine on the world market.

If one had to choose a specific date for when the crisis began, it  would be June 3 2020 – the day the Morrison government announced its  A$688 million Homebuilder scheme. 

This scheme provided up to $25,000 towards building a new home or renovating an existing one. State governments also subsequently offered building grants.

There were reasons to fear the pandemic would devastate home construction. 

The Master Builders Association in 2019 had forecast new-dwelling starts would decline 3.5% in 2020/21. In April 2020,  during the initial phase of the COVID panic spiral, it tipped the  decline would be 40%.

The following graph shows what actually happened. Approvals for all  new dwellings increased more than 25% in 2020-21. Approvals for new  houses rose more than 40%.

Obviously there were multiple factors driving these increases. The Reserve Bank of Australia cut interest rates from 0.75% to 0.25% in March, and again in November to 0.1%. Billions of dollars were being pumped into the economy in other ways. 

Higher housing starts means higher demand for lumber. 

Freestanding houses in particular use larges quantities of lumber –  softwoods for roof and lightweight framing, hardwoods for joinery and  flooring. Carpentry typically represents about 20% of the cost of the average new home. 

However, domestic lumber supply in Australia is going the other way.  Logging of native forests is in decline while domestic plantation  production has plateaued. 

The following graphs shows trends in the volume of wood logged from Australia’s native forests or harvested from plantations. 

You can see hardwoods (shown in dark green and dark blue)  overwhelmingly come from native forests. These volumes have been falling  in line with action to conserve what’s left of native forests. Supply  will fall further when Queensland and Western Australia end native  logging in 2024, and Victoria in 2030. 

Softwoods mostly come from commercial plantations. The volume of  softwood harvested has increased by about 40% over the past 20 years,  but the amount of land plantations has been stable for about a decade. 

Minimal new plantations have been established in recent years. Eastern Australia’s 2019-20 bushfires also affected about 130,000 hectares of commercial plantations.

This means Australian builders are more reliant on imported timber –  at a time most global supply chains are strained and energy prices are  driving up transportation costs.

Wood products are typically shipped in containers, which have been in  short supply during the pandemic (due to extra demand). If you can  actually find a container, the transport cost may still be more than  double than before COVID-19.

Another issue is that Russia is a major wood exporter – second to Canada in all sawn-wood exports, but the top exporter of softwood lumber. While a relatively unimportant source for Australia overall, it dominates in specific products such as laminated veneer lumber.

Australia will impose a 35% tariff on “conflict timber” from Russia (and Belarus) in October.

      Read more:       Weakening Australia's illegal logging laws would undermine the global push to halt forest loss   

Should Australia do more to become self-sufficient? This is a hard question to answer.

Even if you think yes, bear in mind even the fastest-growing softwood tree takes at least 20 years to grow.

Bringing forward production is complicated. Forestry businesses must  forecast demand and lock in production for decades to come. They cannot  be expected to respond to short-term crises in the same way as an oil  producer or toilet paper manufacturer can. 

The hard truth is that the construction industry will have to weather  the storm the best it can – likely until at least 2023. By then the  home-building boom should be at an end, with higher interest rates  likely to slow the pace of housing construction. 

News / National

National

AUGUST 25, 2022

February 10, 2022 — 12.01am

Australia’s  tradie shortage is unlikely to end any time soon as the ongoing house  building and renovation boom keeps skilled tradespeople like plumbers,  bricklayers, electricians and builders busier than ever.

The  Housing Industry Association (HIA) believes the shortage could last for  at least another two years, possibly longer, as tens of thousands of  homes begin construction across the country.

A tradie shortage across Australia is unlikely to end any time soon, experts say.Credit:iStock

HIA  chief economist Tim Reardon said record low interest rates, coupled  with home buyers’ desire for a bigger property during COVID-19, had  created a rush for new home builds and renovations over the past two  years.

“Builders will be at capacity throughout this year and well  into 2023,” Mr Reardon said. “There’s still challenges with land,  labour and materials [affecting the industry].”

The  Association’s figures show 125,000 houses are expected to begin  construction this year across Australia following a record 149,000 in  2021.

Those figures don’t include other dwellings such as apartments, which would push residential construction numbers even higher.

Mr  Reardon said while the federal government’s HomeBuilder grants, aimed  at keeping house construction going during the worst of COVID-19, had  created an initial spike in house builds, there had been another boost  after the grants ended.

“There was a boom following HomeBuilder  and then a secondary boom in the seven months since the end of  HomeBuilder,” Mr Reardon said.

Adding  to the challenges, tradies were also playing catch-up on older builds,  Mr Reardon noted, with lockdowns in 2020 and 2021, and difficulties  getting building materials thanks to COVID putting residential projects behind schedule by between three weeks and five months last year.

That  included home renovation projects, which also boomed over the past two  years, especially as more owner-occupiers bought fixer-uppers to enter  the market in more expensive suburbs.

House builds were delayed by up to three months last year by a lack of construction materials and tradies.Credit:iStock

Renovators were having to wait up to two years for the necessary trades, an analysis of data showed.

“One  of the unique features of this boom is that rarely do we see a  renovations and housing boom at the same time – that’s also happening in  all states across Australia,” Mr Reardon said.

High  demand for tradies has added more pressure to those already working in  difficult circumstances, especially as the Omicron strain of COVID-19  spreads.

Owner of Officer Plumbing Services in Melbourne’s southeast, Chris Hunter, said he had already had jobs affected by Omicron.

Omicron has affected tradies across Australia. Credit:iStock

“I was supposed to do a job for a bathroom, but the stonemason got COVID, so it delayed the project,” Mr Hunter said.

Mr  Hunter is working 30 to 40 jobs per week, including renovations and  maintenance work, sometimes not finishing until past 9 pm.

“I’m  fairly new, I’ve had this business for four years, and I’ve gotten  busier - from the second to the third year there’s been a massive jump  in work, and it’s busier again this year.”

With people continuing  to work from home, using their toilets and taps more, urgent jobs were  coming up more often, meaning it was harder for him to take on jobs  where he was required for longer than a day.

Plumbing jobs have been delayed due to COVID-19.Credit:iStock

Mr  Hunter hired an apprentice in 2020 to help out, and is now looking for  another plumber to join the business, but even that is proving difficult  because of the tradie shortage.

The problem was being exacerbated by tradies who were not getting vaccinated.

Mr  Hunter estimated 15 per cent of tradies had not had their required jabs  to work, with the Australian Council of Trade Unions secretary Sally  McManus estimating that it was close to 10 per cent in 2021.

Tradie shortage issues come at a time when soaring building costs are also hitting the industry.

Timbeer costs are blowing out, adding to the cost of building a home, CoreLogic data shows.Credit:Getty

New  data released by CoreLogic shows that national construction costs had  increased by 7.3 per cent over 2021, the highest annual growth rate  since March 2005.

The Cordell Construction Cost Index showed  construction costs had risen most in South Australia and Western  Australia, where the cost of building a home jumped by 7.9 per cent over  the year.

CoreLogic  research director Tim Lawless said the data showed higher costs were  being driven by an increase in timber prices, with metal costs still  volatile.

“With such a large rise in construction costs over the  year, we could see this translating into more expensive new homes and  bigger renovation costs, ultimately placing additional upwards pressure  on inflation,” Mr Lawless said

   Residential construction companies have been  coming under increasing financial pressure. Picture: Shutterstock                         

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