A luxury housebuilder based in south-east Queensland has called in liquidators.
LDC, based at Holland Park, a southern Brisbane suburb, has appointed liquidators from Mcleods Accounting.
Documents filed with ASIC show that the company owed $7 million to dozens of supplier and trade creditors.
At the time of liquidation the company had 48 projects under way, many of which were individual custom home builds. These will be referred to the Queensland Building and Construction Commission.
“The directors point to a number of reasons [for the liquidation]; a supply shortage, the cost of labour, and they also mentioned there was a number of delays in their builds which resulted in overruns,” liquidator and Mcleods’ managing director Bill Karageozis told The Urban Developer.
While its core business focused on custom homes, LDC was also involved in luxury multi-residential projects.
The liquidation of LDC highlights the entrenched difficulties with fixed price contracts in the construction sector in the face of price uncertainty for materials and labour which only looks set to continue.
“I've been involved in a number of construction insolvencies in the past six to nine months and I can unfortunately confirm that I have consented to or am actively involved in others which may also eventuate in liquidation in the next three to six months,” Karageozis said.
“So, unfortunately that is the outlook for some parts of the industry at this stage.”
Many construction companies were already operating on a knife’s edge, which has been exacerbated by historic costs increases during the past two years.
“Some of the liquidations really are a result of one particular bad project, or a misfortune in relation to a particular site that may have a knock-on effect to others, but generally speaking, some of the ones I’m seeing [are impacted by] overruns involved in fixed price contracts and things along those lines. It’s a profitability issue at this stage,” Karageozis said.
LDC is an early 2023 casualty after a difficult year for construction companies in 2022.
ASIC figures showed 1284 construction companies collapsed during 2021-2022, which was 26 per cent of all insolvencies in the country.
The liquidation of LDC also comes at a difficult time for the residential market generally. According to CoreLogic’s Daily Home Value Index, Australian home values recorded the largest decline on record—8.4 per cent at the end of last week after the peak in early May 2022.
CoreLogic said the latest decline took the national housing downturn into “new territory” breaking the previous record set when home values fell 8.34 per cent between October 2017 and June 2019.
“While the housing downturn between 2017 and 2019 lasted 20 months, the new record-breaking price falls have played out in less than nine months, with further falls expected in the months ahead,” CoreLogic said.
