Chilling reason Aussie home projects abandoned before completion
Incomplete homes have been springing onto market as hundreds of new projects signed off by Sydney councils remain stuck in limbo due to cost blowouts for builders.
The unfinished homes have come up for sale after the would-be owners pulled the plug on plans to build their dream homes, or renovate, midway through construction.
Some of the homes are listed for sale needing just some finishing touches applied while others are a shell of partially laid foundations.
A common theme was that the build prices quoted before the jobs commenced were no longer feasible due to an explosion in the cost of materials and labour and a raft of building company bankruptcies.
Housing Industry Association economist Tim Reardon said many of the Sydney projects greenlit before interest rate hikes in 2022 were on ice because developers could no longer deliver the specifications approved by council at current building costs.
The trend was especially pronounced in the apartment market and Sydney was currently building far fewer unit blocks than headline approvals estimates would suggest, Mr Reardon said.
'They're faux approvals,' he said. 'Only about half the approved projects are actually going ahead … the rest will never get built under the approved plans because they are not commercially feasible.'
Mr Reardon explained that, in the bulk of these cases, developers were delaying or killing projects before bulldozers ever went on site.
The instances where works were abandoned once construction had already commenced were mostly across more bespoke house projects or renovations.
The failed projects nonetheless pointed to 'structural problems' in the home building industry, Mr Reardon said.
'We can expect at least three years of low (building) commencements and the shortage of housing will likely get worse.'
Among the incomplete homes currently up for sale is a property in western suburb Horsley Park, which is mostly just a single-level laid slab and walls. It still needs a roof and much more.
The listing said a buyer is needed to 'complete the home'. The existing structure was labelled as 'approved, although not complete'.
A similar property with just the foundations laid and some partially erected walls is for sale in Greenacre. It is expected to sell for about $2m-$2.5m, although no official price guide has been released.
In the Sutherland Shire suburb of Oyster Bay, an unfinished home was this week listed for sale, with the auction scheduled for later this month.
'The main home is partially built in solid double brick (with) a concrete second floor base,' the listing said. No guide has been released but local sources estimated it could sell for well over $700,000.
Other partially built homes or properties with an abandoned reno job were for sale in Greenwich, Belfield, Bundanoon and North Epping, among other locations.
Scott Cam, the long-time host of TV renovation show The Block, said homeowners usually pulled the plug on building due to mistakes with budgeting, which was difficult to get right in the current climate.
'Materials costs have gone up enormously, building costs have climbed dramatically, and people aren't always aware of what's going on in the industry when they start. You have to be able to budget a project really well,' Mr Cam said.
He added that cost blowouts in some projects were often the result of 'variations', where the owners decided to change their plans once works had already commenced.
'In the building industry, variations are one of the biggest costs to clients. If you do it, it costs money. Then (the project) goes outside the budget. If it's a couple of variations the costs can really go up … some won't have that kind of money.'
REA Group economist Anne Flaherty said sluggish home price growth in some areas may have contributed to the slow rate of housing completions in some areas.
'After Covid, building costs increased at a rate beyond anything we've seen in history,' she said.
'Construction cost increases had been fairly consistent stretching back to the 1960s but there was a spike in 2021 and the combination of higher build costs and lower prices in these markets mean some projects won't be profitable anymore.
'We'd need a massive jump in prices for some of these projects (in their approved form) to be feasible again.'
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