One of Victoria’s largest home builders, Porter Davis Homes, has collapsed, halting construction on 1,700 builds across Victoria and Queensland. The collapse has left dozens of subcontractors in limbo and liquidators scrambling to find new firms to take over the group’s contracts. This sudden collapse has sparked concerns over the stability of the Australian housing market and the potential consequences for the broader economy.
Porter Davis Homes, employing 470 staff, appointed Grant Thornton as liquidators on Friday after the search for a white knight buyer failed on Thursday evening. Staff were informed of the decision at a 9 am meeting at the company’s offices on Friday morning.
The company has over 1,500 homes under construction in Victoria and an additional 200 homes in Queensland. Furthermore, Grant Thornton revealed that there are 779 signed contracts with customers for which building work has yet to commence.
Porter Davis, which anticipated revenue of $555 million for the 2023 financial year, has around 470 employees. The majority of these staff are expected to lose their positions immediately. However, their entitlements are anticipated to be paid out under the government’s Fair Entitlement Guarantee, which applies to companies in liquidation.
Operating primarily in Victoria and south-east Queensland, Porter Davis was ranked the 13th largest home builder in Australia. According to Housing Industry Association figures, the company started construction on 1,734 homes in the 2020/21 financial year.
This collapse has sparked concerns over the stability of the Australian housing market and the potential consequences for the broader economy. Some commentators, like David Johns, suggest that Australia is heading towards a “slow-motion recession” with the collapse of Porter Davis. Others have highlighted that Australian banks are effectively lending out $1 to 16 people on a commercial scale, a practice that would be unsustainable without government guarantees.
This is not the first time that a major home builder’s collapse has sent shockwaves through the industry. In 2011, the collapse of the Hastie Group, an engineering services company, left thousands of subcontractors and suppliers in the lurch. Similarly, the 2013 collapse of the Walton Construction Group impacted thousands of businesses and workers.
The case of Porter Davis Homes serves as a stark reminder of the risks associated with the construction industry and raises questions about the long-term stability of the housing market in Australia. As social media users like Brad Smith and Denis point out, the number of affected homes could be significantly higher than the initial estimates, and the fallout from this collapse may be far-reaching.
Moreover, the effects of Porter Davis’s collapse may be exacerbated by the ongoing struggles in the Australian housing industry. With interest rates still 2% lower than other G7 countries, the industry is already grappling with issues like affordability and supply. The company’s liquidation further highlights these challenges and the need for more robust solutions to ensure a sustainable and healthy housing market in the long term.
As the housing industry grapples with the fallout from Porter Davis’s collapse, the future of the company’s employees, subcontractors, and customers hangs in the balance. The immediate consequences of this event are likely to be felt by those directly involved, but the repercussions may extend to the broader Australian housing market and the economy as a whole.