Building industry insiders say companies and subcontractors will continue to hit the wall due to a material supply crisis.

Queensland-based builder Oracle recently asked customers on fixed price contracts to pay an extra $50,000 to finish their homes due to rising costs and supply issues. Meanwhile, Gold Coast construction company Condev has gone into administration with debts of $33 million, while Probuild went under last year, despite it having $5 billion worth of projects on its books.

Some builders say they are taking a loss on every home they construct because contracts have been locked in on 2020 prices for materials.

Supply chain delays began during the COVID-19 pandemic and have been exacerbated by Russia’s war in Ukraine. Timber and steel are two of the products whose price has risen the most.

Hutchinson Builders managing director Greg Quinn says there is a “perfect storm” hitting the sector.

“In my opinion, a section of the construction industry in some parts of the country, like south-east Queensland, is in quite a mess and some businesses are unlikely to survive the dilemma currently confronting the industry,” Mr Quinn said in a recent message to staff.

“The demise of national builder Probuild and Queensland builder Condev is testament to the difficult and evolving circumstances in the construction industry. The trauma is deep and there are other sizeable industry businesses on the brink.”

He said head contractors are entering an “almost-unmanageable situation”, with construction timelines and cost escalation leaving builders and sub-contractors caught.

“The financial fallout is likely to be big. It’s already too late for some. There is no easy solution,” he said.

Reports say a growing number of developers are going back to customers to ask for extra money for the completion of their homes.

Master Builders has introduced a “cost-plus contract” to better factor in the sharp rise in building material costs, in the hope of leaving builders less financially exposed. Still, most contracts are fixed-price, meaning it is illegal to add in extra cost clauses.