FAST-GROWING areas of Logan, particularly those with new housing estates and high levels of construction, will be most at risk of default over the next 12 months.
Already, Jimboomba, Browns Plains and Springwood-Kingston are listed by CreditorWatch as poor payers.
Jimboomba is among the worst 10 suburbs in the country for defaults. And each of those suburbs registered some of the highest number of defaults over the past three months.
It comes as a warning to suppliers as inflationary pressures and interest rate rises weigh heavily on the construction industry.
Key findings of the digital credit reporting agency’s business risk index also showed small businesses linked to construction are at high risk of not being paid.
According to the Australian Bureau of Statistics Business Register, Logan has fast become the construction capital of Queensland.
The region has the largest number of total registered businesses in the construction sector, comprising 25.5% of all registered businesses in Queensland.
Meanwhile, other key findings show the nation’s economy may have reached a turning point, with trade payment receivables rising to their highest level since July 2021, and credit inquiries up 30% quarter on quarter.
CreditorWatch CEO Patrick Coghlan says despite some green shoots emerging, Australian business communities are far from certain, with more pain predicted to come for businesses with hikes to the cash rate.
“It’s great to see trade receivables and credit enquiries trending up, in line with increasing business confidence, however, rising interest rates and inflation will undoubtedly slow this down to some degree.”
CreditorWatch Chief Economist Anneke Thompson says nearly all central banks around the world have noted there is still a great degree of uncertainty in economic conditions going forward.
“Of course, global issues are a concern, particularly the ongoing war in the Ukraine and associated supply chain issues, however, domestically, Governor Lowe pointed out that we have no evidence in Australia as to how wages growth will respond when unemployment falls below 4%.
“He also noted the high levels of debt that Australians now have, compared to the last monetary policy tightening cycle.
These statements suggest that the RBA won’t be too trigger happy with cash rate increases and will be carefully trying to steer inflation down without causing too much pain to Australian workers and mortgagors in the process.
“We also note that many small businesses secure their business loans against their home, so any downside movement in house prices will have a flow-on impact on small business default risk.”
The research also revealed business default rates are rising on average in Australia, with an expected peak at around 5.8% over the next 12 months.
The probability of default is, according to CreditorWatch, the average number of businesses expected to become insolvent over the next 12 months.
