Rising levels of business debt stress are appearing in Auckland and Northland, credit bureau Centrix says.
Centrix says 320 businesses in Auckland/Northland had a new credit default listed against them during October with construction, hospitality and retail trade the hardest hit industries.
"Auckland and Northland have recorded increased levels of debt stress compared to the rest of New Zealand, with business defaults at 18% in Auckland and 12% in Whangarei. As Alert Level Three remains in place in Auckland – and following Northland’s snap lockdown – uncertainty is hampering small business as they try to operate under restricted conditions," Centrix says in its latest monthly outlook.
Using a three month rolling average and comparing the current quarter to the previous quarter, Centrix says average monthly new business registrations this quarter are running at 5,077 versus 5,805 last quarter. And October credit defaults were 600 versus 580 in September.
"New business registrations were down 13% in October, while business credit defaults rose 3% month-on-month," Centrix says.
The firm says Auckland is running at 85% pre-lockdown credit demand with the city in Covid-19 Alert Level 3.
"Whilst Covid-19’s impact on credit demand has not been as severe as last year’s lockdown, it has a longer tail and is unlikely to fully recover until the Auckland retail sector is able to open back up," says Centrix.
Retail is expected to reopen in Auckland next week.
Meanwhile, mortgage applications increased in October with confidence remaining high in the property market.
"New mortgage lending, however, remained flat in August and September. Whether this is a result of the lockdown delaying settlement, a signal that demand continues to outstrip supply, or an early sign of banks tightening lending criteria, remains to be seen," Centrix says.
"There continues to be growth in non-bank consumer loans as well as auto loans. New credit card applications, on the other hand, remain low compared to historical levels."
The charts below come from Centrix.
8 Comments
Many Kiwis are still stuck in a 19th century mindset, whereby the only investment is housing. This is testament to a disappointing level of widespread financial illiteracy Any muppet can buy a house and become a landlord, but more difficult is to research the market and invest in the real economy and in productive enterprises. No country gets wealthy by selling houses to each other - wealth is created by taking risks, through innovation, by improving productivity and supporting new and expanding businesses.
There are reasons why investment outside of property is both risky and difficult, over regulation, over taxation. interfering bureacrats a low level of competence of many in business and rewards can take a long time to arrive and many today have been crushed by the above and have no inclination to repeat. The younger generation may be very knowledgable on things Facebook/Twitter/Computer Games none of which produce anything of value.
What a joke, already showing your age there with the mention of "Facebook/Twitter/Computer Games". No now it is automated bot scripting (especially for financial and business gains), mass audience marketing, and resource management timings and optimisation. You know things over a decade ago made Facebook, Twitter and Computer Games billions of dollars and continues to reap rewards for large scale banks and exchanges. The younger generation are more well versed in more modern technology than that used by the likes of Facebook and Twitter (now well over a decade old and inching up to two decades). Because a decade in technology is a big difference in medical, financial, agriculture, military, housing, consumer item manufacture and sales terms. Even when it comes to cows the technology has been advanced to the point of exact genetic selection, pairing, using tools for resource management timings and optimisation. But sure You could still use a pen and paper to do things like it was 2500 BC. Just don't be surprised when architects rock out a game engine to have life like comparisons and optimal planning & drafting for large scale building projects, film producers use the same game engine for your stories, bots use the same game algorithms to run sharemarket trades, and it becomes the face of the medical professional you interact with.
The absurd policies of this government are killing many Auckland businesses. Auckland has overall 91% vaccination rate (at least one dose), and the Auckland DHB in particular has got over 94% (at least one dose) and 85% fully vaccinated. How long does this charade need to last for ? Everybody has had ample time to get vaccinated. Fully open Auckland and the country NOW, for f..k sake!
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