the adviser logo

Insolvency rates slated to spike within flood-impacted NSW, QLD

by snichols10 minute read
Insolvency rates slated to spike within flood-impacted NSW, QLD

The number of businesses unable to repay their debts is expected to surge by over one-third over the next 12 months.

The prediction – which is derived from CreditorWatch’s Business Risk Index for April – noted that for businesses located within the Richmond Valley hinterland, namely around the Northern Rivers city of Lismore, insolvency rates are tipped to explode by 36 per cent. 

Earlier this year, intense rainfall saw the flood levee at Lismore’s Wilson River almost reach 12 metres (11.4 metres), a near-record level, alongside the 14-metre mark reached in February, according to the Bureau of Meteorology.

The housing impact alone of these floods across NSW and Queensland is expected to be felt by the thousands. 


Last month, NSW Minister for Customer Service and Digital Government, Victor Dominello, said that over 10,000 homes across NSW, including the Northern Rivers, had been assessed as damaged, and that more than 4,000 had been assessed as uninhabitable.

According to the report, insolvency rates across the southern Brisbane suburbs of Rocklea and Acacia Ridge – also impacted by flooding – are also speculated to grow by 14.5 per cent over the same 12-month period.

Further, the Queensland regions of Gympie and Maryborough forecast to report marginal lifts of 0.6 per cent and 1.5 per cent each.

However, while these rates markED a significant development for defaults in the region, the impact of these floods on loan repayments has been expected by some industry figures

Lendi Group chief executive of distribution Brad Cramb noted earlier this year on LinkedIn that insurance cover is “not offered for floods” in the Northern Rivers region, leaving the cost of rebuilding solely on small business owners.”

Speaking to The Adviser earlier this year, Lennox Head-based broker Zain Peart said that these communities would be under immense strain following the floods, noting the lack of builders required to complete the necessary construction.

He suggested that “defaults will absolutely increase”.

“All of West Ballina, water might have only gone in half a metre, but you still have to rip up everything… it trips the power board... you got to rip out the walls... you’ve got to replace everything... just that little damage is a minimum six months to get back,” he told The Adviser at the time. 

“I had one client call up and was pretty much crying, saying: ‘I’m never going back to my house again’. 

“She’s hoping that she’ll get the insurance payout and maybe enough to clear the loan and will just leave it and [won’t] go back. 

“It’s pretty horrible.”

[Related: $20k grants for NSW flood residents]

flood lismore   ta



Sam Nichols is a journalist at The Adviser and Mortgage Business.


You need to be a member to post comments. Become a member for free today!
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more