Sydney desperately needs houses, so why are more builders going broke than in any other industry?
The number of building company failures in NSW has almost trebled over the past three years, hampering the sector’s capacity to meet ambitious targets to lift housing supply.
“These factors have negatively impacted the feasibility of new residential projects, contributing to a sharp decline in the number of dwelling approvals, on a trend basis, over the past year to their lowest level in a decade,” the budget said. “These pressures have also seen a rise in construction insolvencies, which may delay any recovery in construction activity.”
Research by Peter Tulip, chief economist at the Centre for Independent Studies, found in council areas across Sydney’s eastern suburbs, north shore and northern beaches the sale price of new apartments was between 40-60 per cent above the cost of supplying those apartments. In Randwick, the gap between the cost of supplying apartments and the sale price was 53 per cent, the highest of any council area.
The sector includes a diverse range of occupations ranging from heavy engineering services to bricklayers, tilers, painters and glaziers. Analysis of census data by social research firm McCrindle shows traditional trades were among the biggest sources of employment including electricians , plumbers and carpenters .
He attributes this to prolonged weakness in building approvals and the long lag times for large high density developments which now dominate housing construction in Sydney.
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