As the building industry struggles with cost blow outs and a wave of insolvencies, buyers building their own homes need to be cautious about the builders they select, according to Adam De Jong, sales director at Wilson Homes.
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Speaking ahead of a sales seminar in Launceston for prospective home buyers, Mr De Jong said there have been "some enormous cost increases" over the past 18 months stemming from the effects of COVID and the war in Ukraine.
In many cases, these increased costs have been passed on to builders, threatening to push some to the brink of insolvency.
"There are some great builders in the state, [but] I think consumers just need to go do their homework. [They need to] get some references and understand how others have been through the journey with [the builder]," he said.
Builder insolvencies in the three weeks to August this year were about three times the rate seen in the same period of 2021, according to data from the Australian Securities and Investments Commission.
Tasmania is the only Australian state that lacks a home warranty scheme that protects buyers if the builder becomes insolvent before completing the home, Mr De Jong said.
"We don't have a home warranty scheme. [The state government] are bringing that in, which will be fantastic, it will give consumers some safety, so we're expecting that will happen in the next six months - it's well overdue that protection here."
He said the Federal government played a role in the industry's current difficulties by overstimulating demand for house construction and renovation through grants at the start of the pandemic.
"Those grants caused enormous demand, which sounded like a great idea at the time, but effectively what it did was there just was not enough tradesmen and materials to complete the body of work that was there," he said.
Speaking ahead of the same seminar in Launceston, home finance manager (North) at Bank of US, David Clingeleffer, said his main concern was the rise in interest rates and the need for customers to factor in a buffer.
"Rates are rising and people should be going in with their eyes wide open. Rates may not be where they are now moving forward, so we always encourage our borrowers to borrow wisely and conservatively, and factor in some buffer for the future," he said.
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