Here’s why the bank’s terms and poor financial habits are breaking the building industry

BOOKS: Nearly 10 builders are collapsing every single day; the fuel crisis didn’t cause this, it just made it impossible to hide, says Kurt Hegetschweiler, founder of Builders Coach and author of Million Dollar Builder 2.0. The book is available to new TFE Members – join from $10 a month. Following is an excerpt.

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I speak to more builders each week than almost anyone else in this country. Right now, the message is the same everywhere: good building businesses are breaking under pressure they were never equipped to handle.

In 2025, 3596 construction businesses collapsed, nearly 10 per day, before the fuel crisis landed.

What makes that genuinely bizarre is that demand for housing is at a generational high. The rental vacancy rate sits at 1.1 per cent. A healthy market sits at 3-4 per cent. Rents have climbed 44 per cent in five years. The average capital city rent is $782 a week.

We are at least 200,000 homes short, with that figure forecast to double to 400,000 by 2028.

So why, in the middle of a housing crisis with demand through the roof, are builders collapsing at nearly 10 a day? The answer isn’t bad luck. It’s pricing inaccuracy. And it was always going to catch up.

Most builders are trained to build. They are not trained to run a business under sustained financial pressure. Pricing a job isn’t just measuring materials, it’s forecasting risk across 12 to 18 months in an environment where costs are moving faster than most systems can keep up with.

In practice, builders quote on gut feel. They chase cash flow by shaving margins on already inaccurate quotes. They lock into fixed-price contracts.

Then, when diesel jumps 67.8 cents per litre overnight, when PVC climbs 27 per cent and polyethylene 36 per cent, confirmed in writing from suppliers effective 17April, there’s no room to move. They absorb the hit silently until they can’t.

The hard reality is that many builders and trades are delivering jobs at a loss right now and don’t even know it yet. They’re locked into contracts written months ago. Costs have moved. And they’re wearing every cent of the difference.

When they finally run out of runway, it’s not just a business story, it’s a family left with a half-built house and a contract worth nothing.

It is not just one particular trade that is taking the worst of it, they all are. Anyone moving materials and people to site is bleeding. Concreters, earthmovers, frame and truss suppliers all have direct diesel exposure on every job.

But the deeper danger for trades is this: when a builder collapses, subcontractors don’t get paid. One collapse on a job you’re halfway through, and a trade living hand-to-mouth is done.

The industry needs 486,000 new workers by end of 2026 just to tread water. It won’t get them.

This is a survival test. Accurate pricing, cost-plus contracts, provisional sums and stopping absorbing price hikes they were never supposed to carry are what builders need to do.

There are two things that nobody is saying:

• Banks. The banks are structurally engineering builder collapses. Banks won’t release construction finance unless builders sign fixed-price contracts. That forces builders to carry 100 per cent of the cost risk with zero ability to adjust mid-project. No escalation clauses. No mechanism to recover when costs blow out. The mechanism designed to give consumers certainty is the exact same mechanism pushing builders into insolvency.
• Imports. This is not a Middle East problem. Australia imports roughly 90 per cent of its liquid fuel and holds only 32 days of diesel. Researchers warned in 2019 that our fuel stockpile was dangerously inadequate. That warning was documented, published, and ignored, across multiple governments. The construction industry had nothing to do with those decisions. Canberra loaded the gun. The Middle East pulled the trigger.

This didn’t start with fuel. The market was already under pressure, the fuel shock exposed it. And it is not going away.

For those thinking about building or renovating, if they can afford to build and have a quote from a financially solid builder, they should move now. Waiting doesn’t make it cheaper. Waiting reduces customer options. The pool of capable, financially sound builders is shrinking every single day.

Before a customer signs anything, they should ask these three questions of the builder:

• What happens if materials spike after we’ve signed?
• How do you manage cost escalation mid-project?
• How often do you track actuals against your quote?

A confident, specific answer is a green flag. Vagueness in this market is a reason to walk away, the consequences of choosing the wrong builder right now could be catastrophic. The biggest risk isn’t the price on the contract. It’s your builder not surviving the job.

It is recommended to buffer at least 10-20 per cent above the contract price. Material costs are confirmed rising from 17 April. And customers should not choose the cheapest quote but choose the most financially competent builder.

For builders and trades, this is a survival test. Those still under-pricing jobs, absorbing cost increases, or estimating from gut feel could be next. They should review job costings weekly. Fuel, materials, freight: every one of these elements are moving. If they are not tracking them in real time, they’re flying blind in a storm.

Fuel is no longer overhead businesses can quietly absorb. It has to be a direct cost on every job and shown as a line item.

Rates need to be adjusted. The trades who reset their pricing model now will come out of this stronger. The ones who don’t won’t be here to see it.

The fuel spike isn’t just increasing costs, it’s accelerating a shakeout of the entire Australian construction industry. Demand is at a generational high. The rental crisis is real. The shortage is real. And yet we are losing builders at nearly ten a day.

This isn’t a Middle East problem that happened to Australia. It’s an Australian problem the Middle East finally exposed.

Kurt Hegetschweiler is the founder of Builders Coach and author of Million Dollar Builder 2.0.

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