Green shoots for Bay

By Patrick O'Sullivan


People are realising Hawke's Bay "could be even more amazing", and that's why figures show a recovery in the economy, a business leader says.

Spending in Hawke's Bay jumped in July according to figures from Paymark, which processes 75 per cent of all electronic transactions.

Hawke's Bay recorded a 9.6 per cent increase in spending compared with July 2012 from $97.8 million to $107.2 million.

The national increase was 9.2 per cent, weighted by Auckland/Northland's 10.4 per cent.

Palmerston North topped the country with an 11.6 per cent increase, closely followed by Canterbury on 11.4 per cent thanks to earthquake recovery.

Marlborough, which has taken a hammering over the past three years because of its high exposure to the wine industry, was up 11.3 per cent.

Streetwear clothing chain Red Rat's Hastings manager Sam Henry said the weather was making a difference.

"Good weather is definitely encouraging people to get out of the house for sure," he said.

"I've spoken to other retailers like Cotton On and Factorie and they have said the same thing."

Real Estate, a major economic driver, was also showing sustained growth.

QV's Residential Price Index for July shows that property values, averaged over the past three months, were up in Hastings 3.7 per cent on last year and in Napier 3.1 per cent.

"The disproportion between demand and supply that has been apparent in other regions for some time is now evident in the Hawke's Bay market," QV Hawke's Bay manager Bevan Pickett said.

"With a lack of properties for sale, well-presented homes are being snapped up and multiple-offer situations and higher than expected sale prices are not uncommon."

Hawke's Bay Chamber of Commerce CEO Wayne Walford said people were increasingly realising that Hawke's Bay "could be even more amazing".

"Some of the talk around the Ruataniwha Water Storage Scheme is rubbing off on people and giving a sense that this is now a region that is going to be taking off," he said.

"When people in Central Hawke's Bay get a sense of what that sort of system will bring and the positive economic value of it, they are letting go of some of their savings and testing the market with a little bit of low-level luxury.

"The weather has been fantastic and people are getting out and about because of the sense in the air that the region is about to be even more fantastic. There is a sense of burgeoning growth that is about to take this region by storm."

The other game-changer for Hawke's Bay is still within reach. The results of TAG Oil's well east of Dannevirke are not far away.

TAG's chief operating officer Drew Cadenhead said the results so far were "encouraging, to say the least".

"What I can tell you is, we would definitely be completing this well, probably not for at least three to four months until we get all the data back from the labs and it's all interpreted, but Ngapaeruru-1 was not a red light, it was not an orange light, it is definitely a green light from what we have seen so far."

A second East Coast well was due to be drilled in the next five to nine months.

The last two ANZ quarterly regional trends reports have been mixed but on balance have been optimistic.

Hawke's Bay Registered Master Builders Association president Gordon Sanson has said there were some reports of more work in Hawke's Bay, increasing new building consent numbers for two months in a row was not to declare a trend.

"We best wait until the next month's figures," he said.

The latest Roost Home Loan Affordability Study showed Hawke's Bay affordability had improved for a typical buyer. In Hastings 43.6 per cent of a median income was needed to buy a median priced house and in Napier it was 45.6 per cent.

While affordability has improved in Hawke's Bay an international study released in June showed that New Zealand had the fourth-most overvalued property in the developed world.

The Organisation for Economic Co-operation and Development study said New Zealand's house prices were overvalued by 61 per cent compared to rents and were 23 per cent too high against incomes.

Infometrics economist Gareth Kiernan said Hawke's Bay was well on track for growth - the drought was not as bad as had been feared - it started later than the last severe drought in Hawke's Bay and finished before grass growth slowed.

"I was in Napier in April and there has been an ongoing trend of things generally picking up. It's not rapid but there seems to be a fair bit of substance."

- HAWKES BAY TODAY

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