Builder Aaron Byrne reveals the strain of price hikes in the construction industry

Aaron Byrne, of Aaron Byrne Building, will no longer be taking on house renovations on account of unsustainable prices.

"I've lost $20,000 at least on a job in Wodonga, and about the same on another one this year alone," Mr Byrne said. "That's not out of profit, that's out of my own pocket.

"I had to take out bank loans to pay everyone, because the owners wouldn't and couldn't borrow any more money because the banks wouldn't lend them anymore, so I had to finish the renovation at my own cost."

Statistics reflect an industry in dire straights, with data released by the corporate regulator ASIC on April 17 revealing, from June 2022 to March 2023, 1601 construction companies went insolvent, with 523 of those occurring in the first three months of this year.

Much of the blame could be pinned on fixed price contracts entered into over the pandemic following the government's Homebuilder stimulus package, Mr Byrne said.

"When I go into a fixed price contract, it takes around nine months to get it through council, then when it finally gets through you have to deal with trade unavailability," Mr Byrne said.

"It's really hard to get trades ... it ends up being a lot dearer than what my quote was. Subcontractors used to cost me $55 an hour and now they want $80."

"And it is hard to get them to site, say if I have a three month renovation and I just can't get tradespeople, and materials that used to take a week take a month to get in, the time of the renovation blows out, so it's just a very tricky situation for builders."

Mr Byrne believes that if the current circumstances continue, small builders will have to walk away.

"Small builders are going to stop building new homes, and I think all the bigger builders are going to profit out of all of this and take over the industry," he said.

"So I'm getting out because I'm not in the industry of ripping people off; I don't like charging more than what things are worth, but that's the only way to pre-empt what happens.

"So if I were to do a $300,000 renovation, I'd have to charge the client $400,000 for it because I have to allow for these unprecedented price rises, allow for a lot more time for the build and a lot more money to spend on subcontractors."

IN OTHER NEWS:

Cavalier Homes' Dale Paddle said although suppliers are beginning to ease their prices, the costs still exceed the worth.

"For me, I think the ACCC should be looking at some of them because there is companies like Blue Scope that are recording a $1.2 billion profit two years ago, and the year before it was only $400 million, and this recent year they had a $5 billion profit, and yet they are still putting prices up, and I just think they're greedy," he said.

"We have three main suppliers in Australia today, and when one puts up their prices by 15 per cent, they all seem to on that same day.

"You can't tell me there isn't something going on there."

"It's certainly been a pretty difficult time for a lot of guys; I've talked to builders in Albury Wodonga who say they'll work all year and not make any money, and I talked to one of my bigger competitors, who said he lost $700,000 last year."

Aaron Byrne Building, although not taking on renovations, is still operating out of Beechworth.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: