Housing market 2021

[Madas]

My biggest issue with builders going under is they aren’t taking out the insurance which is supposed to form part of the deposit clients are paying for upfront.

Case in point is when Porter Davis (I’m fairly certain it was them) went under, they immorally didn’t take out the relevant insurances and the state government had to bundle out the poor homeowners and investors which were stitched up from it.
On a seperate note it sets a bad precedent for other builders to do the same thing and expect the government to bundle out others and it paved the way for others to cut corners and redirect funds elsewhere.

Surely there’s some way they can make directors of companies accountable for this?

I’m not sure how they circumvented this ?
Indemnity Insurance certificate taken out by the builder on behalf of the owners has to form part of the building license application
In WA you can’t be issued a building licence without the certificate?

The other problem we smaller builders face is that when these bigger building companies go bust creating hundreds of insurance claims it pushes the premiums through the roof

 

[Punt Road Feral]

I’m not sure how they circumvented this ?
Indemnity Insurance certificate taken out by the builder on behalf of the owners has to form part of the building license application
In WA you can’t be issued a building licence without the certificate?

The other problem we smaller builders face is that when these bigger building companies go bust creating hundreds of insurance claims it pushes the premiums through the roof

I was trying to find the terminology at the time but it escaped me, it was lack of ‘Domestic Builders Insurance’ that they didn’t take out rather than to do with Imnemnity.

Porter Davis Homes Customer Support Payment Scheme

Refunds of deposits of up to 5% of domestic building contract value.

www.vic.gov.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

 

[Madas]

I was trying to find the terminology at the time but it escaped me, it was lack of ‘Domestic Builders Insurance’ that they didn’t take out rather than to do with Imnemnity.

Porter Davis Homes Customer Support Payment Scheme

Refunds of deposits of up to 5% of domestic building contract value.

www.vic.gov.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

Sounds like the same thing just different name
I’ve never heard it called DBI but its often referred to as Home Warranty or Builders Indemnity Insurance

Covers a home owner if builders dies , goes broke or breaches contract

Only ever paid out about $100,000 which wasn’t much considering the premium was about 6%

I think they recently raised the max pay out to around $200,000 but that’s only because building costs have gone through the roof and it was way too low in the first place

 

[Madas]

I was trying to find the terminology at the time but it escaped me, it was lack of ‘Domestic Builders Insurance’ that they didn’t take out rather than to do with Imnemnity.

Porter Davis Homes Customer Support Payment Scheme

Refunds of deposits of up to 5% of domestic building contract value.

www.vic.gov.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

Porter Davis being investigated after insurance oversight - Insurance News - insuranceNEWS.com.au

www.insurancenews.com.au

I can see what they’ve done now though
They’ve signed up contracts then taken a deposit , it’s usually at this stage that they would then make an application for DBI but were trying to shore up funds to keep the business afloat

Quite common in the instances I’ve seen of builders going into a death spiral and signing up lots of new jobs to try and keep cash flow

I’m not sure the problem is in the process that these stages happen, it’s more in the fact that perhaps builders need to undergo a solvency test annually to check whether they should be trading or not .
I notice it is starting to happen with our Indemnity Insurer who is now requesting Financial records annually to ascertain our risk profile.

They only used to ever do it every few years

 

[Punt Road Feral]

It’s a fair call re: annual checks.

On a side note I’m led to believe projects in Victoria for local government and vsba (public schools) builders have to sign stat declarations confirming they have paid they’re contractors up to date before they receive their monthly claims.

Hopefully this weeds out the crooks who funnel the money elsewhere and leave suppliers and contractors out high and dry when they go bust.

 

[ash_1050]

Sounds like the same thing just different name
I’ve never heard it called DBI but its often referred to as Home Warranty or Builders Indemnity Insurance

Covers a home owner if builders dies , goes broke or breaches contract

Only ever paid out about $100,000 which wasn’t much considering the premium was about 6%

I think they recently raised the max pay out to around $200,000 but that’s only because building costs have gone through the roof and it was way too low in the first place

In Vic it's formally known as Domestic building insurance and is managed by the VMIA. It's a requirement for all jobs over $16k and protects the homeowner in the event of the builder dying, disappearing or going insolvent. Builders must have a DBI Certificate before they start work or ask for a deposit or any other payment. It covers the property owner for up to $300,000.

 

[Eagle Of Destiny]

The problem with the housing market is not the number of properties around, it is the number of investment properties as a percentage of overall dwellings added to a lower housing density.

This creates the "supply and demand" issue that has caused inflated housing for a number of decades stepping back to the introduction of negative gearing.

Successive governments have failed to act on this as it creates a wealth effect by people feeling richer as they now have higher asset wealth in higher house prices, majority of voters don't feel its an important issue.

How to reduce the artificial demand for housing though? Removing or limiting the investment element would be a start. We have a new RBA boss who has 4 investment properties, why the need for 4 properties I do not know, but there are many more out there with the same or higher number of investment properties.

Is it worth governments winding down negative gearing and taxing 50% of rental incomes to free up housing supply for a more affordable market so higher interest rates do not affect buyers going forward.

It makes economic sense to have sound interest rate levels of 3-7% while households maintain the ability to save and have access to spend disposable income to flow on through the economy.

Bumpy ride. Will be interesting to see which way the RBA and governments go in future.

Maybe governments should make better use of land instead of sprawling.

 

[Sqotty from office works]

Victoria heading for its worst recession since the 90s.
All government contracts finishing up and 1,000s looking for work which is not on the horizon.
New plastic suburbs will become a wasteland.
Hang on to every dollar you have and don't lose the job you have.
It's going to be chaotic by December.

 

[HirdyLannister]

Opportunity to add more houses to my portfolio

 

[Sqotty from office works]

Opportunity to add more houses to my portfolio

Noticed in Geelong that sales have hit the wall and agents are already begging for offers.
In 3 months there will be a plastic 4wd and a jet ski for sale on every corner.
Those good days are officially OVER

 

[The Sultan]

Noticed in Geelong that sales have hit the wall and agents are already begging for offers.
In 3 months there will be a plastic 4wd and a jet ski for sale on every corner.
Those good days are officially OVER

yep... we (where I work) have just giving our sales plan for balance of year, and next year a very big trim. our head office (global company) is extremely bearish about the next 2 years.

 

[Sqotty from office works]

yep... we (where I work) have just giving our sales plan for balance of year, and next year a very big trim. our head office (global company) is extremely bearish about the next 2 years.

No government spending on projects for the next 2 years.
All those labourers on the rail system now heading out the door and job hunting.
1,000 already getting thier pink slip this month.
Jet skis,boats and plastic Chinese 4wds for sale soon.

 

[Taylor]

Consider that should the global economy slow down, having first seen a wave of economic pain at home reducing inflation and the cost of production here - you'll see massive government spending as stimulus building massive projects, particularly around bulk housing.

In my opinion, they'd already be pumping tens of billions into direct action building if not for the fear of inflation and interest rate rises being directly attributed to their spending costing the federal government elections.

 

[burge13]

Consider that should the global economy slow down, having first seen a wave of economic pain at home reducing inflation and the cost of production here - you'll see massive government spending as stimulus building massive projects, particularly around bulk housing.

In my opinion, they'd already be pumping tens of billions into direct action building if not for the fear of inflation and interest rate rises being directly attributed to their spending costing the federal government elections.

The problem with this is how much the government gets ripped off by builders. They need to be smart with their spending (who am I kidding, expecting too much of them) rather than pay > $2m per house that you and I would spend $800k on.

Will drive up house prices rather than help, the only beneficiaries are the builders

 

[Taylor]

The problem with this is how much the government gets ripped off by builders. They need to be smart with their spending (who am I kidding, expecting too much of them) rather than pay > $2m per house that you and I would spend $800k on.

Will drive up house prices rather than help, the only beneficiaries are the builders

The period of time between now and then, when work is scarce and prices start falling to win the few projects, will be vital to avoid that taxpayer support for big business you mention.

Might be worthwhile looking into donations from those companies to politicians and union groups.

 

[Punt Road Feral]

Watch what will happen.

Governments pump money into new affordable housing, builders put them up with accelerated programmes to meet government KPI’s = poor quality housing on a mass scale that will be looked back on as a fail in decades to come.

Lack of skilled labour and minimal involvement from building surveyors will see issues like the Opal Towers occur in the affordable housing markets.

I hope I’m wrong but it seems predictable from afar.

 

[The Sultan]

No government spending on projects for the next 2 years.
All those labourers on the rail system now heading out the door and job hunting.
1,000 already getting thier pink slip this month.
Jet skis,boats and plastic Chinese 4wds for sale soon.

Yep if things go South there will be a lot of people hurting.

Bit of the US housing crisis about this. Banks lending out massive loans, and then refinancing against raising house prices. cant beleive all the houses that have gone up in Melb outer south east over the past five years. Cookie-cutter estates that all look the same with f-all infastructure

 

[burge13]

Yep if things go South there will be a lot of people hurting.

Bit of the US housing crisis about this. Banks lending out massive loans, and then refinancing against raising house prices. cant beleive all the houses that have gone up in Melb outer south east over the past five years. Cookie-cutter estates that all look the same with f-all infastructure

Every house is the same. The sub division craze has killed off alot of nice houses but a nice outdoor area with some grass and a veranda will become the exception rather than the rule soon. Those that have it will refuse to downsize

Itll just be boring townhouses or identical 3 bedroom floorplans as far as the eye can see on 250sqm blocks. Such character/s