But Maitland Mayor Peter Blackmore said new home builders would be more careful when signing a building contract and choosing a financial lender.

Thornton home builder Excellence Homes went into voluntary administration on Friday, leaving up to 39 partially-completed properties at a standstill.

The Department of Fair Trading has contacted all affected clients. It follows the collapse of Beechwood Homes, which was placed in voluntary administration on May 13.

Cr Blackmore said while affected property owners should be covered by home warranty insurance, he was concerned about the flow-on effects to tradesmen, such as electricians, painters and bricklayers who could be left out of pocket.

He said the city continued to enjoy booming construction despite a general downturn in the industry on the heels of interest rate increases and the rising cost of living.

“I think there are a number of factors that are having an effect (on businesses in the building industry), particularly interest rates,” he said.

“We are still enjoying our growth rate but I think these events will make people more cautious when they are considering building a new home.

“While their first consideration will be finding a design they like and the second factor the affordability, I think more people will be looking to a big, well-known company. And I think a lot of other builders will be certainly looking at their checks and balances as well.”

Fair trading minister Linda Burney warned consumers not to sign building contracts with the Excellence Developments in a statement issued on Friday.

She said the department had been aware of the company’s dire financial situation since the start of the month.

“All consumers who have entered into a contract with Excellence Homes or Excellence Developments should have received a certificate of insurance to cover the work,” she said.

“My advice is for these people to contact their home warranty insurance (CGU or Vero) for further advice about lodging an insurance claim.”