Australia braces for a new wave of construction insolvencies

Australia’s construction sector experienced a wave of construction insolvencies following the COVID-19 pandemic, as illustrated below by Justin Fabo from Antipodean Macro:

Australia’s post-pandemic construction insolvency wave was driven primarily by fixed-price contracts colliding with soaring material and labour costs, supply chain delays, rising interest rates, and weakened cash flow. This combination of factors was a “perfect storm” that wiped out margins and pushed thousands of builders into administration.

Fixed‑price contracts signed before COVID became unprofitable:

The HomeBuilder program encouraged a surge of fixed‑price contracts at a time when costs were about to spike. Many builders later found themselves unable to deliver these projects profitably.