By Barnaby "Bottom-Line" Coyne
The paperwork is signed, the deposits are gone, and the houses aren't built. That's the position facing customers of Bathla Group, a Sydney-area home builder and property developer that has been placed into voluntary administration.
The company told administrators it was hit by a "perfect storm": sales that dried up, plus fallout from the federal government's May budget, according to the Guardian. It's not an isolated case. Bathla joins a long line of Australian residential builders and developers that have collapsed in recent years, felled by the same combination — soaring material costs, labor shortages, and fixed-price contracts signed before those costs spiked.
That last part is the trap. A builder locks in a price with a customer, then steel, timber, and skilled labor get more expensive before the job is done. The builder eats the difference until it can't anymore. Customers left in limbo are often owed both a finished home and a deposit — and in administration, they become creditors standing in line with everyone else.
No dollar figure on the shortfall or the number of affected customers has been confirmed, and it's not yet clear what administrators will recover for those left mid-build. That detail matters, and this paper will follow it.
For now, the lesson is an old one dressed up in new numbers: a fixed price is only as good as the ground it's built on. When costs move and the contract doesn't, somebody eats the loss. This time, add homebuyers to the list of people asking who.
Somebody's paying for this. Let's find out who.
— Compiled from reporting by The Guardian.
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