Canterbury economy on top

Wednesday 27 August 2008

The Canterbury region has out-performed all other regions in terms of economic growth and stability over the last quarter.

By The Landlord

The ASB’s Regional Economic Scoreboard report dishes out rankings to the 16 top-performing regional economies around the country. It also lets property investors see at a glance which regions of New Zealand are shaping up best.

The ASB’s chief economist Nick Tuffley says, though the report is not primarily targeted at property investors, it gives a flavour of different regional performance in specific council areas, using gauges such as population, employment, retail trade, house prices, construction and new car sales.  “From the context of how a region stacks up, the house price figures and what’s happening on the construction side is useful. You gain a reasonable idea of what’s going well.”

Key to Canterbury’s high performance is employment growth, the strongest in the country over the past year. Unemployment has averaged below 3% over the past year. While house prices slipped back by 1.5% this wasn’t as severe as in most other regions. Residential construction was down, in line with national trends, however non-residential consents “had tapered off”.

Southland region ranked in second position “by a fingernail”, mainly because its retail spending growth is the second-highest in the South Island. Unemployment is also the lowest in the country, averaging a rate of 2.1% over the past year. House price growth is cooling but price growth is still well ahead of anywhere else in the country. Car registrations have actually risen over the past year – the only region to register such an increase. Given that the region is holding up better than most, consumer confidence is by far the lowest in the country.

By far the worst performance this quarter came from Otago. Unemployment was below the national average. House prices fell 3.8% year on year, the second largest fall registered in the second quarter. Residential construction outlook is down in line with the rest of the country but the non-residential outlook is comparatively weaker.

Tuffley says the key theme in the report is wherever the dairy money is going in, the regions’ economies are holding up well. The only exception is the Waikato region which was hit by drought – and the flow-on effect should mean the downturn is only temporary.

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