Australian homeowners could face price increases of up to 50 per cent from tradies as the construction industry battles its worst crisis in decades and thousands of businesses collapsing under mounting costs.

Construction industry expert Kurt Hegetschweiler, founder of Builders Coach, warned the petrol crisis in the Middle East had triggered a perfect storm for Australian builders already struggling to survive.

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“We’re living through the biggest industry shake-up we’ve seen in decades,” Hegetschweiler told Sunrise.

“For the average Australian, it’s not so much can they afford to build as will the builder be able to finish his job.”

There were 3,500 industry-related business collapses last year — more than double the normal annual rate of 1,000 to 1,400.

The unprecedented collapse rate comes despite soaring demand, with vacancy rates at just 1.1 per cent and a genuine housing crisis gripping the nation.

Hegetschweiler said the paradox of high demand and mass bankruptcies came down to pricing accuracy and price shock.

He said builders were dropping their margins to win work in a race to the bottom, only discovering they’re losing money when it’s too late.

“It’s a sad story from a business perspective, but it’s the Australian family with half a home built and nowhere to go where the real impact often is,” he said.

Kurt Hegetschweiler warns that trades prices could jump 50 per cent as construction industry faces crisis Credit: 7NEWS

Subcontractors locked into fixed-price contracts are being particularly hard hit, with plastic prices surging about 40 per cent.

Many tradies were also being left unpaid when builders go under, Hegetschweiler added.

For Australians planning renovations or new builds, Hegetschweiler advised proceeding with caution but not necessarily waiting.

“The housing crisis is not going to go away. The pool of quality builders and trades is going to shrink,” he said.

He recommended having buffers of 10 to 20 per cent beyond the quoted budget and asking builders two key questions: what they’ll do if prices rise during the job, and what their process is for price changes or variations.

“If the builder’s vague, walk,” he said.

“If they’re very clear, they can demonstrate a process and speak to some of their clients as well, then absolutely go ahead because it’s only going to be more expensive 12 months from now.”