The residential construction industry in Australia is facing challenges due to the sharp rise in
construction input costs, compounded by shortages of labour and materials, which has eroded profit
margins on existing fixed-price contracts (Graph C.1). Reflecting these pressures, a number of large
residential construction firms have entered into insolvency over the past year. Overall, construction
company insolvencies have increased sharply, exceeding their pre-pandemic levels and accounting for close
to 30 per cent of all company insolvencies. More recently, the increase in interest rates has
begun to raise debt-servicing costs for many firms, adding to financial…
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