The highest-profile economic data release this week was the country’s Q1 GDP figures, which confirmed what many suspected, we were in a recession at the start of the year.
The Stats NZ data shows a minor 0.1% drop in GDP in the March quarter, which confirmed a technical recession after Q4’s fall of 0.7%. Education, transport, manufacturing, and retail trade were contributors to the latest drop, although other sectors such as construction, IT, and financial and insurance services still managed to expand in Q1.
Even though the figure has made headlines today – it was trending on business and finance news sites in Australia for example – it is “old news”, given that we’re already pretty close to the end of Q2. And the encouraging view is that some forecasters think GDP will now gradually expand over the next year or two. The labour market has also stayed strong – providing some degree of insulation for the property market.
Indeed, the implications of the GDP figure and Q1 recession for the property market are generally pretty limited. With employment still strong, the confirmation of a recession in terms of economic activity over late 2022 and early 2023 is unlikely to trigger expectations of renewed or further downwards pressure for property values.
What happens next is where the focus will be and is arguably of much greater importance. The lagged effects of previous increases in interest rates are yet to take their full toll on household finances, but encouragingly most analysts now expect the economy to be on a slow but steady growth path from here on. Employment isn’t expected to drop much either, if at all.
In other words, the worst in terms of economic performance may now be in the rearview mirror.
About Kelvin Davidson
Kelvin joined CoreLogic in March 2018 as Senior Research Analyst, before moving into his current role of Chief Property Economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.
Kelvin is well practiced in applying macroeconomic trends and data to the property market, both residential and commercial.
In his role with CoreLogic Kelvin’s focus is on keeping up to date with what’s going on in the property market and continually finding different ways for viewing and interpreting it. Kelvin’s economics background means that he knows his way around a spreadsheet, but more importantly he always puts more emphasis on providing the key insights and telling a story, whether his audience be clients or the media.
Kelvin holds a Bachelor of Commerce with Honours majoring in Economics from University of Canterbury.
About CoreLogic New Zealand
CoreLogic NZ is a leading, independent provider of property data and analytics. We help people build better lives by providing rich, up-to-the-minute property insights that inform the very best property decisions. Formed in 2014 following the merger of two companies that had strong foundations in New Zealand’s property industry – Terralink Ltd and PropertyIQ NZ Ltd – we have the most comprehensive property database with coverage of 99% of the NZ property market and more than 500 million decision points in our database.
We provide services across a wide range of industries, including Banking & Finance, Real Estate, Government, Insurance and Construction. Our diverse, innovative solutions help our clients identify and manage growth opportunities, improve performance and mitigate risk. We also operate consumer-facing portal propertyvalue.co.nz – providing important insights for people looking to buy or sell their home or investment property. We are a wholly owned subsidiary of CoreLogic, Inc – one of the largest data and analytics companies in the world with offices in New Zealand, Australia, the United States and United Kingdom. For more information visit corelogic.co.nz.
