As cities suffer, optimism for rural areas
Economic growth is set to soften in the year ahead, but rural New Zealand and areas set to benefit from the resumption of international tourism should fare better than most, Westpac says.
Rising interest rates and falling house prices will weigh on all regions to different degrees, the bank concluded in its latest regional economic forecast.
Auckland, Wellington and Manawatū have had the worstperforming housing markets in the country over recent months, the bank said. It forecast that house prices in all three areas would continue to underperform the national average and also identified Gisborne and Hawke’s
Bay among the regions that might face a housing market ‘‘reckoning’’ in the months ahead.
Auckland was vulnerable because a large proportion of house buyers in the city were investors who were most sensitive to rising interest rates, it said. Other regions should do a bit better, including the top of the South Island, which was better protected by its larger proportion of lifestyle properties and retirees living in that area.
Westpac forecast that home building activity would remain firm in most regions over the coming year, despite the housing market downturn.
‘‘Consents are high and most regions have a large amount of work still in the pipeline,’’ it said.
‘‘Shortages of materials and increasing absenteeism will merely extend that out further into the future. That in turn should support regional manufacturing, particularly in places like Auckland and Canterbury.’’
All regions should benefit from the resumption of international tourism, it said, with Otago ‘‘and to a lesser degree Auckland’’ set to benefit most.
Westpac forecast Southland and Northland would outperform the national average for economic growth, due to robust agricultural and aluminium prices, and Canterbury would at least hold up well compared to the other big metropolitan regions.