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By Pete Wargent

Construction insolvencies to record highs

There were another 524 construction insolvencies in the March 2023 quarter, an increase of 93 per cent from a year earlier.

235 of the failures were in New South Wales, 149 in Victoria, and 89 in Queensland.

Construction Insolvencies

The residential construction sector is known to have a high multiplier, and failures will ripple out through subcontractors and small businesses, in turn hurting the economy.

Over the year to March, there were 2,130 insolvencies in the sector, including 964 in New South Wales, 583 in Victoria, and 332 in Queensland.

Annual Construction Insolvencies

Unfortunately, this shrinks the capacity of the sector to build homes, with many projects now failing or being scrapped.

Financial markets aren't pricing any further rate hikes, but with lending for new homes and construction already sinking to decade lows policy is already well into restrictive territory.

This is why I think any further monetary tightening now would only be matched by further loosening later.

About Pete Wargent Pete is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. Using a long term approach to building businesses, investing in equities, & owning a portfolio he achieved financial independence at the age of 33. Visit his blog
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