Building Sector Insolvencies Decline After Years of Pain

Construction sector insolvencies have declined 4.1 per cent, the first quarterly year-on-year drop in commercial insolvencies since 2021.

According to Equifax’s quarterly commercial insights report, the improvement comes as overall commercial credit demand increased 3 per cent in the third quarter of 2025, driven by easing monetary policy and stronger business conditions.

Business loan applications grew 5 per cent year-on-year, while asset finance applications rose 0.7 per cent.

Despite recording 2630 insolvencies across the January to September 2025 period, construction remains the sector with the highest insolvency volumes.

Equifax general manager of commercial Brad Walters said the data reflected “a hopeful sign of a sector experiencing slow recovery”.

Queensland led credit demand growth with a 5 per cent increase year-on-year, followed by Western Australia at 5 per cent, New South Wales at 4 per cent and South Australia at 2 per cent.

Victoria’s credit demand contracted 1 per cent, an improvement from the previous quarter’s 3 per cent decline.

The report indicates larger entities demonstrated greater credit appetite, with demand increasing 4.2 per cent compared to 2.7 per cent growth among small and medium enterprises.

Average credit scores have risen steadily, reflecting an influx of higher credit quality entities seeking finance.

Mixed results across industry sectors

Arts and recreation insolvencies decreased 26 per cent, wholesale trade fell 25 per cent, and hospitality dropped 19 per cent. Agriculture insolvencies increased 61 per cent, mining rose 40 per cent, and retail climbed 3.9 per cent.

Payment delays improved nationally, with businesses paying an average of 0.3 days earlier compared to the same quarter last year.

Queensland and Western Australia businesses now pay nearly a day earlier than last year, aligning with their stronger credit demand growth.

“While this indicator of growing financial relief is positive to see, it is not uniform across all states,” Walters said.

“NSW businesses, for example, saw payment delays remain stubbornly high, contrasting with most other states where average trade payment days have been consistently decreasing for six quarters.”

The improvement in construction insolvencies comes amid heightened market concerns about builder stability.

In September, Equifax found that 78 per cent of Australians are concerned about construction insolvencies, and half have little or no confidence in the quality and long-term durability of new apartment buildings.