More Collapses as Crunch Time Approaches - Simply Frameless

The dominos are falling. Will it get worse before it gets better, and are you prepared for all scenarios?

With 2 building giants collapsing within 24-hours of each other (The Lloyd Group and Porter Davis Homes), Australia experiences in real-time just how fragile the real-estate and construction industry is currently. Months and months of global supply-chain woes compounded by continuous rising costs of raw material as well as aggressive rate hikes, sees the market converge into maximum pain for both borrowers and building companies simultaneously.

The Perfect Storm

This perfect storm was a mix of unfortunate timing and convergence of both high-velocity rate hikes (in attempt to control inflation) and impactful fractures in global supply-chains which saw raw materials sky-rocket in price. If left unchecked, the contagion can spread rapidly (much like the global banking crisis which we are currently experiencing).

This unfortunately has also lead to the consequence of sky-rocketing rent prices, with demand out-pacing supply manifold in or around the major cities in Australia, further fuelling inflation. So what could the Australian government do to keep inflation in check whilst reducing the negative impacts of the economy?

Controlling Inflation without Rate Hikes

There are many ways to attempt to control inflation without hiking rates. The cost of controlling inflation at the expense of negative impacts on the economy should be carefully considered as there are various measures that could be taken to minimise this.

Considerations to adjust the reserve requirements of the banks, encourage saving over consumption, selling government securities to decrease in-market money supply, or reducing government spending through fiscal policies are just some of the alternative ways that can help with inflation whilst keeping economic health in check.

What About Renovations?

When the real-estate market is in a stressed state, the renovation market largely follows. Affected by both the increase in raw material costs and decrease in property sale prices (due to the expensive borrowing), renovation projects are largely taking a back-seat position for many (with the exception of urgent or essential jobs).

As shown by the collapse of the recent construction giants, no business is too big to fail. Ensuring a tight contractual agreement with stringent timelines, quality checks and payment terms are all tools that needs to be leveraged in order to mitigate risk and run to successful project completion.

Get in touch with Simply Frameless if you have an essential renovation project that needs to be completed. Experience our stringent professionalism and quality checks in place, even through market turmoil.