Rotorua's booming: Local economy outstrips national GDP

Rotorua's economy is continuing to boom - enjoying a start to 2018 that saw many economic indicators outstripping the national growth rates.

However, while Rotorua's gross domestic product (GDP), residential consents, guest nights and retail trade were among the indicators showing positive growth, some residents are excluded from the rewards.

The Infometrics Quarterly Economic Monitor for March 2018 shows Rotorua's GDP grew by 4 per cent in the first quarter of 2018, but in the same quarter, Jobseeker Support recipients increased by 3 per cent.

Nationally, GDP grew 2.7 per cent but Jobseeker Support recipients dropped by 0.5 per cent.

Infometrics economist Brad Olsen said Rotorua's rising number of Jobseekers "may begin to indicate that the skills in Rotorua aren't matching what businesses need for new workers".

"Although the economy as a whole may be expanding, it doesn't necessarily mean everyone is reaping the rewards of growth. There are obviously people in Rotorua who want to work, and a potential solution may be to retrain people or allow them to undertake other skills education to get into the jobs that are opening up in Rotorua."

Rotorua Chamber of Commerce chief executive Allison Lawton said the Jobseekers increase could be a seasonal issue.

"We know the weather has been terrible this season from a tourism perspective, compared to last year. Bad weather impacts on tourists visiting many of our attractions."

But Rotorua must not forget its GDP growth was performing "very well", she said.

"We must not lose sight of the fact that we are performing well above New Zealand at 2.7 per cent."

Another standout indicator was the 34 per cent increase in residential building consents for the first quarter of 2018, compared with the same time last year.

Nationally, the number of consents increased by 2.5 per cent over the same period.

House prices in the Rotorua district were up 7.1 per cent in the year to March, when compared to the year to March 2017.

"It appears that this growth in house prices has encouraged people to build rather than buy, with residential consents up 34 per cent and house sales down 27 per cent," the report said.

Rotorua Ownit Mortgages adviser and manager Haley Hubbard said the housing and consents section of the report was not at all surprising.

"With the increase in property valuations, clients now have equity to build that second home or do extensive renovations to create the home they can't find.

"The influence of TV and social media plays a big part in inquiries with our 'can do' and 'DIY' attitude, along with the popularity of 'small homes'."

Rotorua Registered Master Builders president Bill Clement said houses were not selling like they used to in Rotorua.

"People are hanging on to them ... Sometimes the residential consents sought are just for a new fireplace or bathroom."

He also said it was only recently that land became available to build on in Rotorua.

"We had a shortage of sections for a while. The release of land at Ngongotaha and Lynmore has changed that."

He said all builders in Rotorua were "pretty busy".

The report shows the tourism industry is still one of the biggest drivers of growth and employment in Rotorua.

Tourism spending rose 9 per cent in the year to March 2018, guest nights in commercial accommodation were up 6.7 per cent and private accommodation grew even faster with the number of Airbnb guest nights increasing by a whopping 67 per cent in summer 2017/2018 compared with the summer before.

"The number of tourists coming to New Zealand is very high. In key hotspots like Rotorua, this means tourists might not be able to find a hotel room within their budget."

A rapid spike in car registration numbers in Rotorua in the year to March was also highlighted in the report.

Rotorua's registration tally grew by 18 per cent to 3083.

Nationally the number grew by 4.4 per cent and 8.4 per cent in the Bay of Plenty in that time.

Olsen said: "Strong retail trade growth indicates that consumers are more open to spending, and it seems that this is extending to bigger items such as cars.

"Underpinning this kind of lift is the strong local economy and solid population growth, more money and more people around means more cars are going to be bought."

The report showed traffic flows in the district increased by 3.8 per cent, above the 2 per cent recorded nationally.

Rotorua Lakes Council deputy mayor Dave Donaldson said it was not surprising to see the increased flows, considering Rotorua's population and visitor numbers were rising.

"Although increased traffic can provide challenges in communities, this is continually being monitored and measures are being taken to address these pressure points.

"Council's safe and sustainable journeys team have spent the past three years focusing on providing facilities that encourage the use of other modes of transport as a way to reduce the impact on infrastructure."

He said the urban cycling network was taking shape and Bay of Plenty Regional Council had helped revamp bus routes.

Overall Donaldson said the report showed the Rotorua economy continued to "trend upwards".

"It is encouraging to see our GDP growth is higher than the national average. Rotorua is an exceptional place full of innovation and growing businesses."