Major construction firm Porter Davis Homes Group has collapsed into liquidation on Friday putting at risk more than 1,700 unfinished homes in Queensland and Victoria.
PDH Group will cease trading and all construction work immediately, leaving homeowners stranded with no clear answers as to if or when their houses will be completed.
At present there are more than 1,500 affected homes in Victoria with a further 200 in Queensland.
The group also has 779 signed contracts with customers where work has yet to begin.
PDH Group’s board of directors expressed “regret” for the company’s failure, but stressed they were “hopeful that a solution could be found to support Porter Davis customers in completing their homes.”
Said Jahani, Matt Byrnes and Cameron Crichton of Grant Thornton Australia were appointed liquidators of 14 companies in PDH Group, but the liquidation does not include Englehart Homes which will continue to operate in its own right.
A spokesperson for Grant Thornton said investigations into the collapse were ongoing, but pointed to challenging operating conditions as a major factor.
“The extremely challenging environment for residential home building has directly contributed to the PDH Group’s financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the Group’s liquidity,” they said.
“Notwithstanding the financial support from shareholders and lenders, the Group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the Directors were left with no option but to place the companies into liquidation.”
PHD Group employed 470 employees, with 410 made redundant amid the liquidation and 60 remaining to assist the liquidators in exploring options for parts of the group.
“Employees will be able to register claims with the Fair Entitlements Guarantee Scheme, a government safety net for employee entitlements,” Mr Byrnes told SkyNews.com.au.
Mr Byrnes also revealed discussions were underway with “a number of parties” about potentially transferring some contracts to a new builder or builders.
“These discussions are ongoing,” he said.
The news comes amid a concerning run of collapses in the Australian construction sector.
Several large firms folded in the final months of 2022, including giant ProBuild as well as ConDev and Oracle, amid soaring materials costs and a softening housing market.
Recent data from the Australian Bureau of Statistics shows approvals for building private homes are at their lowest level since June 2012, with total dwellings approvals falling 27.6 per cent in January.
First home buyer loans trended downward at the start of the year, falling 8.1 per cent to their lowest point in five years.
The decline in both the number of homes being built and the number being bought speaks to a market which has become increasingly depressed by rising inflation and interest rates.
Mr Byrnes told the Australian Financial Review the industry had seen a “dramatic fall” in demand accompanying the worsening conditions and compounded by the end of government incentives such as the HomeBuilder scheme.
“If we go back 12 to 18 months, the economy was ticking along well and confidence was strong. Incentives were there in the market for home buyers. All those things probably contributed to stronger demand,” he said.
“Was there a pull forward? There was possibly an element of that. But there has been a dramatic fall away in the pipeline and in new home sales this year – probably more so than the industry expected.”
His comments suggest further collapses may still be on the horizon.