Australia's Channel 9 News reported on May 6 that a worrying "tsunami of bankruptcy" swept through Australia, and the construction and catering services industry became the hardest hit areas
Consumer credit reporting agency Equifax said the number of insolvencies of Australian businesses has reached its highest level since 2015, up 41% year-on-year and a staggering 145.7% since 2022.
Equifax's Scott Mason said the trend poses serious questions about the viability of many businesses – particularly SMEs and self-employed in the construction and foodservice industries.
Mr Mason said these businesses were "clearly more likely" to face mortgage stress.
(Image source: News Corp Australia)
According to Equifax, self-employed individuals in the construction industry are 60% more likely to default on their mortgage in the early stages than the average consumer, and SMEs are 30% more likely to default on their mortgages in the early stage. Similarly, self-employed people in the food service industry are 75% more likely to default on their mortgages.
The picture and text have nothing to do (Image source: Internet)
"Overall, many Australian consumers are struggling, with data from our consumer sector showing a 30 per cent rise in early mortgage delinquencies in the latest quarter compared to two years ago," Mr Mason said. ”
Equifax's data found that self-employed and small and medium-sized enterprises in the construction industry in different parts of Australia face varying degrees of pressure.
Mr Mason said self-employed people in Western Australia and South Australia were twice as likely to default on their early mortgages, compared to 44 per cent higher in Victoria.
The picture and text have nothing to do (Image source: Internet)
"These business owners have to make some extremely difficult choices between paying for their business or their personal expenses," says Mason. "As a result, their mortgage payments started to fall behind. In addition, DBT – the average time it takes to repay maturing debt – also increased year-on-year, bringing the average DBT to 6.5 days.
Equifax said a further sign of stress in the construction industry was that people in the industry paid their arrears an average of 10.2 days beyond the agreed deadline.