Porter Davis collapse: what happens next?

If they can't, what happens to the half-finished ghost homes dotted through Australia's towns and cities?

The Australian Master Builder Association CEO Denita Wawn told ACM that other contractors will have to finish these houses.

Staff shortages are hitting the construction industry in the aftermath of COVID-19 lockdowns, these builders are missing the extra sets of helping hands.

Porter Davis Homes went into liquidation on March 31, leaving the owners of more than 1700 incomplete homes across Victoria and Queensland in limbo.

Work on all current builds have come to an immediate halt and a further 779 signed contracts yet to start are up in the air.

Another construction firm, Lloyd Group, was also placed in voluntary administration last Friday, affecting 59 NSW and Victorian projects - including many in regional areas - and 200 staff.

Liquidators at Grant Thornton Australia said an "extremely challenging environment for residential home building" had contributed to the collapse.

"Rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impact[ed] the Group's liquidity," a Grant Thornton spokesperson said.

Graham Rees and his wife were looking forward to retiring in a new, two-storey home in Torquay on Victoria's surf coast, a few streets away from their daughter and grandchildren.

That dream is uncertain now.

"Your heart just drops. The build has been slow anyway and it's been frustrating and then it's just the unknown," Mr Rees told ACM.

"There's so many questions. Where do you go from here? What happens to the house? Is any builder going to want to take over a half-finished house?"

Work began on the Rees' home in June 2022, after delays in securing planning approvals.

The couple had hoped to be living in their new home by now.

Mr Rees said they were almost at the "lock-up stage" - when the exterior is secured - but no work had been done for four weeks when the company collapsed.

"There's a couple of rooms that haven't been roofed and I'd like to get them done before winter time," he said.

"But we've been told by the building surveyor that no work is to happen on the site until a new builder starts.

"Even if we do get another builder it could take six to 12 months before they're ready to do anything anyway."

Mr Rees is hoping some of his questions, and likely those of many others, will be answered in an online webinar on April 4.

"Construction companies are extraordinarily busy at the moment following the high demand for new homes and renovations in 2020 to 2022," Ms Wawn said.

"It will take some time to find enough builders to cover that work."

Ms Wawn said she expects half-built homes will be finished as soon as possible, but given the extent of existing building contracts, doesn't expect pressures to lift until the end of 2023.

"Over the COVID-19 lockdowns we saw building approvals go well in excess of 200,000 new homes across the country," she said.

"Many people decided to build new homes or renovate, and as a consequence we saw a surge in demand for new homes."

Victorian carpenter Jake McConnell, whose name has been changed to protect his identity in ongoing interactions with Porter Davis, has outstanding invoices due for his work.

"Liquidation sucks, and the reason it sucks for tradies is that we get paid last," he told ACM.

Mr McConnell said builders are unlikely to pick up where Porter Davis left off.

"Most builders won't take a job that's been started by another company," he said.

"As the new builder, you're responsible - it doesn't matter who started it, you're the one that finished it."

Liquidators said on March 31 it would contact customers within the week, hopefully with a way to continue their build.

In the meantime they recommend seeking legal advice and contacting the relevant home warranty provider - either the Victorian Managed Insurance Authority or the Queensland Building and Construction Commission.

Domestic building insurance is required for works valued above $16,000 and covers customers if work is defective or unfinished.

A webinar for customers is being held by Grant Thornton liquidators on April 4 at 10am.

The Victorian Building Authority said it was working with other government agencies and building surveyors to support owners.

"We recognise this is a very difficult time for many Victorians," a VBA spokesperson said.

Victorian Premier Daniel Andrews has already said that the government would not act as financial backstop for customers.

The Australian Master Builder Association CEO Denita Wawn said Australia should return to a trade-school model for the next generation and move away from university education of trades.

This model of schooling lets students explore the range of trades and skills they could pursue before picking their specialisation.

"One of the key issues to address in this country is getting more people interested in trades," Ms Wawn said.

Ms Wawn said we should focus on promoting trades as a worthwhile field of study for all genders and ages, as well as attracting talent back from overseas.

"There's so much work out there, juniors are getting harder and harder to find," Mr McConnell said, who would also like to see the trade-school model return.

"We're not all built the same, so why would you have a system that's built for one type of student and hope that's going to cover everyone," he said.

"Not everyone's into book learning," Mr McConnell.

Do you know more? Email anna.mcguinness@austcommunitymedia.com.au in the ACM national team.

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