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Southland steps up to ASB Regional Economic Score's Top Spot

Southland proves awe-inspiring in more ways than one

New Zealand’s southernmost region leapt seven places to stand at the top of this quarter’s Scoreboard thanks to a hot housing market and transfixing tourists with its plentiful beauty.

ASB chief economist Nick Tuffley says, “The Southland housing market is hot, with the highest annual sales growth in the country. This strength is also translating into healthy house price growth.

“Meanwhile, tourists are obviously discovering the region’s hidden gems, such as Te Anau, with the area also leading annual growth in guest nights.”

There was no holding Southland back this quarter, with the rural sector outlook also improving.

“Things were definitely playing out in Southland’s favour, with good spring growing conditions, the Mycoplasma Bovis situation looking more positive over time, and lamb prices setting record highs. There is a lot for Southland to rejoice about,” Tuffley says, “all up, the region is well-deserving of a five-star rating.”

The cowbells are ringing in the Waikato as the welcome mat leads to double-digit house sales

A medley of building-block successes led to the Waikato region leaping ten places over the quarter to sit second on the scoreboard and snag it a five-star rating.

Moving Mooloo country up the rankings was the housing market with double-digit annual sales growth over the year.

“Similarly, the construction industry has a good pipeline of work to look forward to following 11% annual growth in the value of building consents,” Tuffley says.

While the region also recorded solid reading across the other ASB Economic Scoreboard measures, Tuffley suspects 2019 may not bring with it such good fortunes.

“We’re a little circumspect about the region’s outlook, particularly as Fonterra trimmed its milk price forecast twice over the December quarter. Is this as good as it gets when it comes to milk prices? That question will be on the minds of many in this dairying region as they look to 2019,” Tuffley says.

Make a U-turn - Auckland moves spectacularly in the wrong direction

The City of Sails turned into the city of a stagnant housing market with house prices effectively unchanged from this time a year ago.

“This dragged the Auckland region down nine places to 15th equal with Canterbury on the Scoreboard. And as a result we’ve trimmed a star off its rating, leaving it with just two stars,” Tuffley says.

In contrast, the jobs market remained a bright spot, with Auckland generating around 35,000 jobs over the year to September.

And Tuffley admits to being pleasantly surprised by the fact Auckland’s retail activity has held up over the quarter.

“Remember this is when we had significant petrol price rises, including the Auckland-specific tax. Maybe the influx of Teslas and lime scooters helped provide an offset?” ponders Tuffley.

It’s not a year to remember for Northland as it takes another tumble thanks to the door shutting on house sales

What a difference three quarters can make! In Q1 Northland was top of the scoreboard, in Q2 it had slipped to 8th and now fast forward to Q3, and Northland is hovering near the bottom in 13th spot.

“Northland’s slip down the scoreboard has been swift after it fell another four spots this quarter.
“The housing market has run out of steam in the North, with annual growth (or decline in Northland’s case) the weakest in the country. Similarly, falling building consents indicate softness in the construction sector ahead,” Tuffley explains.

There are some bright spots on the horizon for Northland too, with horticulture, forestry and tourism holding strong and the prospect of a lift in economic activity as summer gets into full swing.

The sun has started setting rapidly on construction intentions in the Bay of Plenty, sinking the Bay like a stone from 2nd place to share 13th spot with Northland.

With the drop, the region also lost a star, going from four stars to three.

The tumble poses the question, is this a permanent change in fortune for the region?

“We think not,” says Tuffley, “Kiwifruit incomes are at record highs and tourism, particularly the cruise market, remains strong. On that basis, we anticipate that the Bay will rebound over the coming quarters.”

The full ASB Regional Economic Scoreboard, along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html

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