New Zealand is witnessing a sharp rise in company liquidations, with businesses across all sectors struggling to navigate economic headwinds. According to the latest report from credit bureau Centrix, liquidations surged by 38% in the year leading up to January 2025, marking the highest rate recorded since Centrix began tracking insolvencies in 2019.
Rising Insolvencies Across the Country
The increase in liquidations has been felt across both the North and South Islands, though the latter has experienced a significantly steeper rise. While the North Island saw a 35% uptick in company failures, the South Island recorded a dramatic 67% increase.
Auckland reported the highest number of liquidations last quarter, with 354 businesses shutting down. The reasons behind the regional disparities vary, with some areas more affected by sector-specific downturns and economic conditions than others.
Construction, Transport, and Hospitality Hardest Hit
Among the hardest-hit industries is construction, which continues to struggle with rising material costs, supply chain disruptions, and weaker demand. Over the past year, business defaults in the sector increased by 40%, while company liquidations climbed 41%. Residential home builders have been particularly affected, with 235 companies shutting down in 2024 alone.
The transport sector also recorded a sharp increase in insolvencies, with liquidations up 79% year-on-year. High operating costs and fluctuating demand have put immense pressure on freight, postal, and delivery service providers.
Meanwhile, the hospitality industry saw a 49% rise in liquidations, reflecting changing consumer habits and the impact of inflation on discretionary spending. Rising costs and reduced foot traffic have made it increasingly difficult for restaurants, cafes, and bars to stay afloat.
The professional services sector has not been spared either, with 204 companies liquidated—an alarming 45% increase from the previous year. Businesses in advertising, accounting, and consulting have been struggling due to declining client demand and shifting market dynamics.
Credit Defaults and Financial Hardship on the Rise
Beyond company liquidations, broader financial distress is evident across the economy. Business credit defaults remain high, particularly in the construction and transport industries, where defaults increased by 35% and 30%, respectively.
At the consumer level, financial hardship cases have reached their highest level since the COVID-19 pandemic. Reports of financial distress rose by 20% year-on-year, with 14,700 accounts flagged in January 2025. Of these, 46% were linked to mortgage repayments, while 30% were related to credit card debt.
Despite a modest 3% decline in the number of people behind on payments, mortgage arrears reached an eight-year high, with 23,700 home loans reported past due—an increase of 6%. This trend underscores the growing financial strain on households amid persistent inflation and elevated interest rates.