Construction industry struggling over debt, unfinished projects

Queensland construction industry is struggling as developers try to pay off interest charges on unfinished projects delayed due to the rainy season and upcoming holidays.

Urban Development Institute of Australia policy director Martin Zaltron informed the Sydney Morning Herald that developers were facing multi-million dollar interest bills as an estimated US$4 million in monthly interest on pending developments and renovations were being made in the country. "All of those costs add up and of course anything in the development industry flows on to other sectors of the economy," Zaltron said.

Australia’s rainy season in October and November have hit the construction industry as projects are delayed and some developers are forced out of business. "It's had a big impact on their incomes, people who work in the industry mostly work on a contract basis so when they're not working they're not earning and it's not good for that to be happening with the Christmas break looming,” Housing Industry Association executive director Warwick Temby said.

Buyers who are expecting new homes to be finished or renovation may have to wait longer and consider renting while construction projects finish. The Weather Channel reports that this year was the wettest spring in decades. The unexpected weather conditions have hampered projects all over the country.

The delays would put back the start of new projects, risking the state's development. It may also push up future prices as builders tried to recoup costs lost on present contracts, Zaltron added. "If a development project can't be sold until it's completed then the longer it takes until that sale occurs and the [money] comes in ... they're facing the interest costs.”