Another building firm in Perth has gone into insolvency as job losses in the construction sector in that state continue to mount.
Deloitte Restructuring Services has announced that its partners Jason Tracey and Gary Doran have been appointed as joint voluntary administrators of Perth-based home building outfit Capital Works Constructions Pty Ltd.
Operating out of the northern Perth suburb of Osborne Park, Capital employs 24 people and trades under the names of Freelife Homes and Visionaire Homes.
Freelife Homes is currently building houses for approximately 229 customers mostly across metropolitan Perth and has approximately 84 new homes in the pipeline waiting to be commenced.
Also under administration will be Capital Construction Hire Pty Ltd, a labour company which principally provides contract labour to Capital Works.
The latest development comes amid concern about growing incidences of construction business failure and job losses in Perth as the previously booming home building recovery eases.
Over the past year or two, both firms operating within the residential construction sector in Perth and their staff enjoyed strong operating conditions as the number of new housing starts throughout Western Australia surged from just over 20,000 in 2012 to more than 32,000 last year and demand for tradespeople and especially bricklayers surged.
Now, however, there are growing signs that the market is past its peak. Even after adjusting for seasonal factors, the number of new houses and apartments approved for construction in the first three months of this year was down 12 per cent from its peak in the June quarter of last year, according to ABS data. Sales of new homes, according to the joint industry and government Housing Industry Forecasting Group, are now 14 per cent below their peak reached last October.
In this environment, coupled with an easing of activity in commercial building, concerns about business failure and job losses are mounting.
In April, a major commercial construction company owned by former West Coast Eagles footballer Phil Matera failed to persuade its largest creditor to accept the terms of a rescue plan, while in March, around 75 jobs were lost when school building outfit Robinson Build-Tech.
In a statement, Tracey said Deloitte’s review of Capital’s financial position was at an early stage.
He acknowledged the uncertainty faced by customers and staff and said Deloitte’s priority was to understand the impact of Capital’s financial position among customers and communicate developments with them as soon as possible.
“Our focus will be on trying to secure in conjunction with the insurer the completion of customer homes and maximise the value of the Group’s pipeline works and intellectual property by working closely with existing stakeholders so that we can achieve the best outcome for all parties,” he said.