Rising insolvencies of construction companies, deteriorating building quality, and low housing supply are leading to a major trust deficit amongst property investors in Australia, according to a recent survey by global data, analytics and technology company Equifax.
According to Equifax’s latest consumer research, over two-fifths (45%) of Australians intend to invest in property (purchase, renovate, or build a home or investment property) in the next five years. However, nearly half (47%) cite lack of trust in the building or construction industry (34%) and/or a lack of qualified contractors or builders in the market (32%) as the biggest barriers.
The construction industry is responsible for 31.5% of all insolvency cases recorded in Q3, which adds further pressure to the sector with almost seven in ten (68%) Australians concerned about the rising insolvencies and their potential impact on housing supply.
Building quality is another concern affecting the industry, with two-fifths (41%) of Australians saying that their homes and apartments have visible damage and structural or design issues. The research also reveals that Australians would be willing to spend extra to be on the safe side – over three in five (63%) are willing to pay more to get the assurance of working with trustworthy property developers or building professionals.
“Only one in three Australians has a positive perception of the industry – and there is a big gap to bridge. However, we know there are many capable, reliable and resilient industry players that are dedicated to doing the right thing. The opportunity is there to rebuild consumer trust, and for trustworthy building professionals to benefit from improved market confidence,” says Brad Walters, head of product and rating services at Equifax.
On the current supply shortage impacting the market, more than half of the respondents (56%) say there are not enough homes to consider buying or moving into, while nearly two-thirds (64%) are concerned that the low supply level, coupled with high demand, will negatively impact building quality in the country.
“How can we support consumers and create an opportunity for the building and construction industry after a period of turbulence? That is the big question here. We’ve seen Australians familiarising themselves with independent rating tools and learning to use them when looking for credible construction firms and building professionals. One in three of those with property plans is aware of the tools, which is a testament to Australians’ increasing education and due diligence,” says Walters.
While a third of Australians with property plans for the next five years have a negative perception of the construction industry, nearly three in ten (28%) of this group admit that their perception has improved in the past 12 months. For those consumers aware of the Independent Construction Industry Rating Tool (iCIRT) developed by Equifax, the chance of an improved perception of the construction industry in the past 12 months increases to 76%.
“The correlation between the awareness of independent rating tools and change in perception of the construction industry is tangible,” comments Walters. “It is understandable that consumers have construction and property concerns, but rating tools like iCIRT help provide them peace of mind.”
The iCIRT star-rating system gives developers, builders, building and design practitioners, certifiers, trade contractors and consultants a rating of between 1 and 5 stars, with businesses that obtain 3 gold stars and above classified as trustworthy. This gives consumers transparency and visibility, allowing them to choose building professionals confidently.
 Results from Equifax Quarterly Commercial Insights - September 2023
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