Construction companies in NSW collapsing at record rate as building slowdown bites

| 26.09,19. 01:49 PM |


Construction companies in NSW collapsing at record rate as building slowdown bites


Photo: This apartment construction site in Cronulla was left half-finished after the developer went under. (ABC News: John Gunn)




New figures show the housing slowdown is biting NSW hard, with the number of construction companies going under last quarter hitting its highest level in almost four years.


The statistics, provided by ASIC, show 169 NSW-based construction companies went into administration, receivership or a court-ordered shutdown in the June quarter — the highest number since the September quarter in 2015.


Over the whole 2018-19 financial year, 556 construction companies went under — 101 more than the previous financial year.


Experts say it is a reflection of the state's slowing apartment and housing market, with about 50,000 less apartments being constructed compared to the same time two years ago, and a marked slowdown in housing construction.


An increasing number of half-finished apartment projects are dotting the Sydney landscape, with property development giant Ralan Group — which collapsed in July owing $500 million to creditors — the most high-profile example.


Association of Independent Insolvency Practitioners president Stephen Hathway said there was no doubt the industry was "stressed".


Mr Hathway, who also runs his own liquidation firm, said small construction companies had been hit hardest.


"These days it's subcontractors on subcontractors," he said.


"And the general feel I'm getting from talking to my fellow liquidators, is that in the building industry subbies just slow down paying the little ones [construction companies].


"It's a spiral, and it's always a bit of a scurry at the end to make sure you get paid before it all falls over."


While ASIC declined to comment on the building data, it said the most common reason companies went into administration was for "inadequate cash flow" or "poor financial control".


Experts have also pointed to the trend of "phoenix activity" in NSW — where a new company is created to continue the business of a company deliberately liquidated to avoid paying its debts, taxes or creditors.


The NSW Government said it worked with "various agencies" to combat phoenixing behaviour and was committed to "strengthening the building sector" through a number of reforms.


Despite making up about 6 per cent of NSW's gross domestic product, the state's construction industry is over-represented in the number of failed businesses, making up 20.6 per cent of all companies calling in the administrators over the 2018-19 financial year.


abc


(Votes: 0)

Other News

police charge Isabela Camelo-Gomez with murder of her mother, Irene Jones NSW Government accuses Mascot Towers residents of 'forcing hand' on remediation payments Truck makes 'brilliant recovery' after trailers sway wildly on Adelaide's South Eastern Freeway British travel firm Thomas Cook collapses, stranding hundreds of thousands Faulty Takata airbag was due to be replaced two days before fatal crash, inquest hears Possible suspect device found in Gratton Steet bus stop QFES volunteer charged with deliberately lighting bushfires Teen arrested over Sydney video shoot 'riot' Four arrested after spate of violence in Sydney overnight Five children, youngest aged 12, charged after high-speed police chase through Brisbane ماذا سيحدث لنتانياهو إذا لم يشكل الحكومة؟ Serial escapee accused of punching police dog flees from Perth hospital 'Element of surprise': Government defends no warning signs for $88m phone detection cameras 'Father and son' dead in NSW plane crash near Coffs Harbour, police say Jock Palfreeman released from Bulgarian prison and taken to detention centre عشاق آبل خيموا مبكرا أمام متاجرها في أستراليا ليكونوا أول من يحصل على آيفون 11 Bullying and violence inquiry in Canberra schools backs protection orders, social workers Elderly patient dies after being ramped at Flinders Medical Centre Doctors failed to act on sepsis risk in the hours before Joanne Craig's death, coroner finds 70m wind turbine blade blocks road after truck rollover near Bothwell in Tasmania Byron Council evacuated as Sydney bomb squad sent in to deal with 'suspicious device' Sir Charles Gardiner Hospital executive claimed $500,000 in cancer research funding, CCC finds The Catholic Church has its own secret investigation into Pell. Here's who is running it Two arrested over murder of Danielle Easey who was dumped in creek wrapped in plastic Mum uses son's deadly drink-driving crash as warning to teens Alleged Darwin gunman Benjamin Glenn Hoffmann to plead not guilty, lawyer says Woman shot by police in Geraldton in WA's Mid West dies in hospital Rain reaches parts of western NSW but no real relief for farmers battling drought Man accused of indecently assaulting child in shopping centre Man charged with murder over Perth woman's death