Alan Johnston, of Robinson Asphalts, at the nearly completed Western Hills Drive, Kensington Ave roundabout, one of several construction projects contributing to economic growth in Northland. Photo / John Stone
Economists are optimistic about Northland's future but at the same time surprised by the extent of pessimism in the region during the last financial quarter.
David Norman, industry economist, writing in the Westpac Regional Roundup for August 2016, said the bank expected to see an improvement in residents' outlook during the remainder of the year, mirroring the bank's optimism based on a booming construction sector, solid population growth and rising house prices.
He said regional economic confidence improved slightly in June and is now better than the five-year average.
"However, pessimists still significantly outweigh optimists," Mr Norman said.
Robinson Asphalts' Annie Johnston agrees with the Westpac outlook for Northland but says the property development company is surprised economic confidence for the region is not more optimistic.
"We are experiencing high demand, high forward work load and have increased our capacity over the last 12 months to meet demand.
"Speaking with industry peers we're confident that this is common across the sector," she said.
"This is all very positive for Northland and we don't see things slowing up for a little while yet."
Mrs Johnston suspects the challenges in the farming sector might be part of the reason for weak optimism.
"Farming is suffering and this no doubt has a significant impact on the overall confidence levels quoted. At the end of the day, all sectors experience ups and downs, as does the economy and we've certainly experienced that with the GFC but now construction is in catch-up mode so, for us, it's the age-old adage of make hay while the sun shines.
"Northland has so much going for it and we believe people from Auckland and other areas are starting to stand up and take notice of what we have to offer," she said.
Trevor Griffiths, co-director with Heather Tomason of Griffiths & Associates, says business is busier than it's ever been.
His project management company, which usually manages about 100 projects a year ranging in value from $5000 to $30 million, is having to hire a new staff member every four months to keep up with demand.
"We have never worked so hard in the 13 years we have been in business," he said.
Mr Griffiths says the current surge in construction is because of an unusual convergence of domestic, commercial and infrastructure demand. "It's all become aligned and there is a massive demand all at the same time."
This had led to a lack of resources and a lack of product and an increase in building costs as a result, he said.
Platinum Homes Northland is experiencing growth with increasing work on the books, says director Dean McGonagle.
"It feels really busy but then it is not like 2006 to 2008. The main difference being that there are more building companies in the region - more arms in the feeding trough so to speak.
"I geared up about six months ago for the increase having had experience with this sort of thing before," he said.
Mr McGonagle says a lack of qualified, but good-quality tradespeople is an issue and he hopes the industry can attract a good crop of new tradies to the region.
He also believes the current boom is here to stay for at least the next five to six years with the Auckland market remaining strong.
"It is not just the baby boomers shifting north in particular to the Waipu and Kerikeri regions it is also a younger age group now with the unaffordability of homes in Auckland to high.
"Then there will be the Puhoi to Wellsford motorway that will open up Mangawhai, Waipu and One Tree Point even further."
New Zealand Chambers of Commerce Northland chief executive Tony Collins says the Westpac survey conclusion mirrors what the chamber's own most recent survey indicated.
"Anecdotally confidence of individual businesses still is positive but obviously there would be some variations across sectors due to seasonal variations in customer demand.
"Often tourism and hospitality reflects a lower optimism at this time of year than they would over summer.
"Although we have not seen any direct correlation between dairy prices and downturn in demand across the wider business community, we do know it has impacted on those directly related with that particular supply chain.
"Another positive is obviously the continued population growth and the benefit that can have to growing businesses," Mr Collins said.
The Westpac Regional Roundup said while regional employment confidence had dipped during the quarter there were many positives which supported the bank's optimism in the region.
Passenger vehicles registrations in the June quarter were up 39 per cent over the five-year average, implying strong household confidence.
House prices rose 17 per cent on the previous year, and the number of new dwellings consented was nearly double the five-year average.
"This will support future jobs growth, and again reflects households making sizeable investments in the region," Mr Norman said.
As far as the outlook for Northland went, he said, economic indicators, other than direct confidence measures, pointed to a period of solid growth.
"With a booming construction sector, solid population growth and rising house prices, we expect a sense of greater wealth and prosperity to pervade. House price growth is unlikely to remain near 20 per cent for very long, but we do expect to see some continued gains over the next 12 to 18 months.
"The horticulture sector will continue to show signs of strength, and forestry's surprising resilience will benefit the region.
"Meat and wool, another important sector in the region, faces a moderate outlook and is not expected to negatively impact the regional economy. With major centres seeing big price increases in accommodation, the opportunity exists for Northland to grab a bigger share of the domestic tourism market in particular although recent reductions in flights to the region may affect access and therefore stunt growth," he said.
ASB's regional economic scoreboard for the June quarter also pointed to poor consumer confidence in Northland going against the region's strong economic performance during the quarter as worthy of third place in the scoreboard.
The active housing and tourist markets point to benefits in the north from Aucklanders' wanderings and the general national tourism drive, ASB said. These factors were behind the strong retail sales, double-digit house price growth and extra house building activity.