Master Builders Victoria says it has an optimistic outlook despite major challenges in the construction industry.

A recent casualty of these pressures is Ballarat's Bond Homes, a residential construction firm, which entered administration, leaving 16 homeowners in a difficult situation. 

The broader Australian construction sector also saw a dip, with building approvals experiencing a 7.7 per cent decline in June, as reported by the Australian Bureau of Statistics.

David Rowe, co-owner of Bond Homes, attributed the downfall to a combination of fixed-price contracts, COVID-19 related delays, escalating material costs, and labour shortages. 

Other industry players like Porter Davis and Lloyd Group faced similar circumstances earlier this year.

Statistics from ASIC highlight the scope of the challenge, revealing that over 2,500 construction companies across Australia have faced liquidation, administration, or receivership since mid-2021.

Megan Peacock, Executive Director of Public Affairs at Master Builders Victoria, has acknowledged the trend, saying; “We are really alert to this issue but we are certainly not alarmed. I think it is the market adjusting itself”

Peacock envisions a positive shift ahead, pointing to the recent stabilisation of building material costs, heightened cost-consciousness among builders, and increasing consumer confidence due to stable interest rates. 

She believes that these factors will contribute to the eventual steadying of the building and construction industry.

However, the Australian Bureau of Statistics data points to ongoing challenges, showing a 7.7 per cent drop in building approvals in June following a substantial 20.5 per cent increase in May. 

Peacock suggests this downturn may persist until 2026, influenced by living costs and rising interest rates.

Amid this context, a new report (PDF) from the Australian Constructors Association underscores the need for construction industry improvements to enhance national productivity.

In the words of Jon Davies, CEO of the Australian Constructors Association; “Improving the efficiency of the construction industry is a matter of national importance”. 

He says there is potential for huge savings if productivity is raised to the national average, leading to smoother project execution across various sectors.

Davies calls for a comprehensive National Construction Strategy developed in collaboration with federal and state governments, industry representatives, and unions. He believes this collective effort will drive the construction industry towards a healthier and more productive future.