South Island trifecta leads ASB’s latest Regional Economic Scoreboard
- South Island leads top three, with Otago, Canterbury and Southland in first, second and third place
- Big drops are seen in Northland, down from 5th to 8th, and Waikato, down from 4th to 9th and Auckland, falling from 9th to 14th
- Despite ongoing economic challenges, the outlook for 2025 is more optimistic.
Otago takes top spot, with South Island trifecta leading for the September 2024 quarter
The South Island region heads into Christmas on a high with Otago, Canterbury and Southland taking the top three spots in this quarter’s ASB Regional Economic Scoreboard. The scoreboard ranks regions based on year-on-year growth across a range of measures, including employment, building consents and retail sales.
Otago has consistently been in the first or second spot for two consecutive years.
“It’s been great to see Otago go from strength to strength over the past while,” says ASB Chief Economist Nick Tuffley. “It’s impressive to see such sustained growth.”
Tuffley says the fruits of recovery in tourism will no doubt have helped the region. Otago also has the fourth highest population growth in the country which has contributed to strong retail sales numbers and growth in employment.
“Canterbury has also had a strong finish to the quarter and is one to continue watching. In fact, this region is one of the places to be with population growth second only to Auckland, strong employment and house sales above the national average.”
Rounding out the top three, Southland rebounded back up the rankings after a sharp slip from first place at the start of 2024. The region topped the country for house price growth, achieving 4.6% annual growth and ranked fifth for population growth, following a trend for strong growth at the upper and lower parts of New Zealand, particularly at the bottom of the South Island.
Northland, Waikato and Auckland take a hit
Northland has seen a sharp drop to its ranking, falling to 13th place this quarter. Weakness in the housing market has been a key factor in the decline, with house prices dropping by 1.8% annually, one of the largest regional declines. Residential consent issuance was also down but non-residential construction proved to be a bright spot, with a massive 77.7% increase, propping the region up in the rankings.
Tuffley says the outlook for Northland is mixed over the coming quarters, but improvements in the dairy and meat sectors, coupled with lower interest rates, should bring a boost to the region.
“The proposed four-lane highway to Whangarei and proposed re-purposing of the Marsden Point oil refinery into an energy precinct will also strengthen Northland’s economic recovery and resilience.”
Waikato has struggled to maintain a top ranking and shares 9th place with the Bay of Plenty this quarter. Residents of the region are some of the most optimistic in New Zealand, with consumer confidence remaining high despite facing difficulties in employment, construction and retail sales. House sales did grow by 12.4% annually, outpacing the national average of 7.4%, although house prices saw a decline of 0.4%, aligned with the national trend.
Meanwhile, Auckland continues to slip in the rankings, landing in 14th place this quarter, although consumer confidence has picked up in the region amid further interest rate drops. The housing market remains weak, with annual sales in the city sitting at -0.6% compared with the national average of 7.4%.
“Auckland is our most populated city and will face significant challenges in 2025 from easing net migration, plateauing regional tourism, and a loosening labour market with unemployment set to rise in the first half of the year. There is hope for recovery though, with the prospect of further interest rate cuts, and we anticipate a pronounced improvement in the second half of 2025 for this region,” says Tuffley.
More positive outlook for 2025
While the overall state of New Zealand’s growth this quarter remains weak, Tuffley says the trend is heading towards better days ahead for the country’s economy.
“Inflationary pressures are continuing to ease, which has given the Reserve Bank more confidence in its monetary easing cycle. We expect to see annual CPI inflation to remain contained in the Reserve Bank’s target band. So, despite prevailing challenges, there is cause for optimism and for New Zealanders to start looking ahead to how they can thrive in ’25.”
House prices are expected to continue to lift as buyer sentiment improves, as indicated by the latestASB Housing Confidence survey. The most significant recovery is expected in the latter half of 2025. Retail sales have seen a drop in 2024, but a progressive recovery is likely in 2025.
“Overall, our scoreboards have shown that 2024 has been a mixed bag, with a subdued housing market, an increase in unemployment, easing of net migration inflows and tourism starting to level off. We forecast a brighter outlook in 2025 for sectors like construction and retail and remain cautiously optimistic about seeing improvements across the board as the year progresses.”
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
About the ASB Regional Economic Scoreboard
The ASB Regional Economic Scoreboard takes the latest quarterly regional statistics and ranks the economic performance of New Zealand’s 16 Regional Council areas. The fastest growing regions gain the highest ratings, and a good performance by the national economy raises the ratings of all regions. Ratings are updated every three months, and are based on 11 measures, including employment, construction, retail trade, and house prices.
