Builder sells own property to survive building industry crisis
Written by admin on October 13, 2024
The true financial and emotional burden of the government’s Covid housing stimulus has been revealed as builders continue to fight uphill against an uncertain future.
Jason Janssen, chairman of Home Builders Action Group, revealed that what followed the WA government’s 2020 $444 million housing stimulus package was “the toughest two years of my life”, during which he had to sell off his own property just to keep his head above water.
Mr Janssen, also the director of the building company Activa Homes Group, said the utter “decimation” of the industry had such a severe impact on builders that in at least one case, a peer had taken their life.
He considers himself one of the more fortunate builders in that, unlike some “greedy” companies, he didn’t “max out” his capacity four years ago.
“Unfortunately a lot of builders took on too much work as part of the stimulus and they are the ones that are still suffering at the moment,” Mr Janssen said.
For Mr Janssen, he was knocking back jobs from September 2020, only a few months after the stimulus was announced, despite clients “begging” him to build them a home.
On both sides of the fence however, irreparable damage was done.
“This government stimulus structurally damaged and weakened the building industry, and we’ve seen insolvencies at record highs,” Mr Janssen said.
At the peak of the crisis, builders across the country were being slammed in the media as furious customers complained about costs going up and lengthy delays.
“During that period, it was probably the toughest two years of my life.
“You’re going to work every day, busting your a**, losing money and getting whipped by everyone – clients, media, you name it. You’re just in an unwinnable situation.”
It was only about 18 months ago that things started to change for the better.
“People started to realise it was not just a builders’ issue – it’s bigger than that. It’s a boom that’s been created by the government and builders are pretty much fighting a losing battle with their hands tied behind their backs,” he said.
“They can’t pass on price increases and they’ve got no option but to work their a**es off and lose money.”
Mr Janssen estimated that the government stimulus wiped out 10 years of profit from his company.
“That’s how severe this was. And it’s not just me; all the big companies have lost hundreds of millions of dollars,” he said.
As companies continued plundering their way through their backlog of jobs – some that have been on hold for years – customers had continued to suffer, Mr Janssen said.
“The devastating thing is, for these clients it’s a no-win situation. The clients are losing heaps of time and they’re spending money on holding costs and rent, and they probably can’t afford to go, ‘I’ll give you $30,000 to finish my house sooner’, because they’ve already expended that in losses
“And the builder is losing money while completing that job as well.”
It could be another five years before the industry returns to pre-Covid levels, Mr Janssen estimated.
“From 2020 to 2029, it’s basically a nine-year write-off. It’s almost like our decade of decimation effectively.”
The broad impact is impossible to understate.
“Some of these builders have told me they’ve actually considered taking their own life. That’s how stressful and bad it is,” he said.
A “great builder” passed away about six weeks ago in circumstances Mr Janssen believed were associated with the anguish surrounding his business.
“In a way, I feel his pain because I lived through it and it can be so hard to see a way out sometimes.”
Small glimmers of hope for the industry were on the horizon though and he expects that by mid-2025, all surviving builders would be back to making a profit.
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brooke.rolfe@news.com.au
