Has The Collapse of Construction Companies Started?

A number of construction firms are expected to fail as things have increasingly gotten more expensive for them to do business. Some say that the collapse has already started and we see that there are growing problems in this sector not just in the US but in other areas around the world too.

The average cost for materials required to build an average single family home in the US grew significantly in the last couple of years, seeing almost a 20% increase between 2020 and 2021.

Not every builder is going to be able to easily absorb those changes in the market.

The cost has increased around 15% just in the US for 2021 for homebuilding, this is a high that hasn't been seen in decades.

It has been suggested that perhaps over the next year or year and a half that we might see a significant decline in production and sales, we can see this happening around the US with multiple reports suggesting that home sales are dropping.

There are multiple regions facing a property crisis in one way or another.

There is a fear that we might see a domino like effect with the closing of construction companies today. There are several companies in Australia that have already failed.

As well, China isn't the only area facing a crisis with uncompleted projects too.

In Australia it has been estimated that around 9% of the construction firms might fail.

It is anticipated that we might see this market change take place over the next year. For those companies which have already failed it results in more unfinished housing projects for people who have been waiting.

Many people have suspected that a housing crash might be coming, how long have these whispers been going on? Meanwhile, there are others who argue that it will never crash, or that if it does it will never be any dip of significance, it won't bring houses back down to affordable levels.

Either way there are problems brewing and a lot of pain that will be inflicted with each project that fails.

Pics:
pixabay
This is not to be taken as financial advice and has been posted for information purposes only.
Sources:
https://www.abc.net.au/news/2022-08-23/greed-construction-loss-making-boom-sees-builders-collapse/101334170
https://www.dailymail.co.uk/news/article-11144239/Real-reasons-Australian-construction-collapsing-Oracle-Homes-catastrophe.html
https://www.abc.net.au/news/2022-08-01/house-prices-dive-july-corelogic-report/101286770