This article is from the Australian Property Journal archive
COLLAPSED builder Porter Davis reportedly slashed the prices of new homes right up until going into liquidation last week, as it sought to attract more buyers in the face of financial trouble.
On another dark day for the construction industry on Friday, work was halted on 1,700 Porter Davis homes – 1,500 in Victoria, the rest in Queensland – and 410 staff made redundant as the company appointed Grant Thornton as liquidators.
Builder Lloyd Group called in voluntary administrators on the same day.
Porter Davis’ collapse followed the failure of hail Mary bid to find a saviour on the Thursday night. There is an estimated shortfall of $20 million.
The Sydney Morning Herald reported that Porter Davis lopped $50,000 off the price of its signature Grange-style houses early in February, while other homes in its range were discounted by between $20,000 and $40,000.
Customers should find out “within the next week” if Grant Thornton has secured a new builder to finish partially completed homes, according to the Financial Review.
Grant Thornton is holding an online webinar with customers this morning at 10.
Some customers have had their unfinished homes damaged and looted, as per The Sydney Morning Herald.
Victorian Premier Daniel Andrews has said the government would not act as a financial backstop for affected customers.
“There may be a role for the VMIA (the state-backed Victorian Managed Insurance Authority) in providing advice, but we’re not the financier of last resort.
“We know, and acknowledge, that this is a really tough time for those people who’ve got a house that hasn’t been finished or indeed some that haven’t even started.” Andrew said.
The VMIA’s insurance covers up to 20% of the building contract price for non-completion claims, up to a maximum of $300,000 for policies issued from 1st July, 2014.
Builders in Victoria have to buy domestic building insurance on behalf of the home owner for all domestic projects worth over $16,000. The VMIA is not the only provider of this insurance.
In Queensland, builders must buy home warranty insurance on behalf of the home owner for residential construction work valued at more than $3,300. This lasts for six years and six months. It is administered by the Queensland Building and Construction Commission.
