Well, another year is virtually done and dusted, and it’s a good time to reflect on the ‘Year in Credit’ – and perhaps prophesise on what we can expect in 2017?
Amongst other things, 2016 produced NZ with a new Prime Minister, Olympic champions, earthquakes, and skyrocketing house prices.
From a credit perspective, the year was dominated by the housing industry. Auckland house prices skyrocketing, and the rest of the country following in the latter part of the year.
Construction has been advancing at an unprecedented rate, and while we saw a ‘tailing off’ in the residential Canterbury market, this was more than compensated for by the Auckland domestic activity.
However, despite the signs of a good economy going forward, – often drawing attention and envy from our cross- tasman cousins – lurking behind this burgeoning market are the signs of stress that always appear during these periods of apparent prosperity.
We only have to look back at the Sept 01 article on our website “Canterburys Bloody Problem” to see the aftermath of the tsunami that was the Canterbury building boom.
So, as we reflect on what was an overall good year in the building and most related industries, and look forward to more of the same in 2017, we do need to keep reminding ourselves that debt is currently at its highest levels probably in recent history, interest rates will start to rise soon, and the perception of work=cashflow=profit is not always the case.
Complacency in the credit area is not an option for smart minded credit managers at this time of the year – most businesses fail in the month of February, due to Xmas spend, early tax commitments in the New Year, and un-attentive customers and lenders whose attention can be diverted at this time by other more exciting activities on the horizon.
Let’s all look forward to a prosperous 2017, but be mindful of the traps that await if we neglect the basics over the next few months, and be aware that while the apple harvest may appear to be at its best ever on the surface, there may also be an increase in the number of worms inside.
Merry Xmas to you all.
From the team at CreditWorks.