In the years following the COVID-19 pandemic, Australia’s construction sector experienced a sharp rise in construction insolvencies.
This wave of insolvencies was driven primarily by fixed-price contracts undertaken in the wake of the HomeBuilder stimulus. After these contracts were signed, supply chain bottlenecks sent material and labour costs soaring, which, combined with rising interest rates, weakened cash flow.
This combination of factors was a “perfect storm” that wiped out margins and pushed thousands of builders into insolvency.
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