House sales, migration spur growth

There has been a drop in non-residential building consents in the district, such as those from buildings like Countdown Regent in 2014. Photo / File

Soaring house sales and prices, a boost in guest nights and commercial vehicle registrations are partly responsible for a 3.2 per cent lift in Whangarei District's gross domestic product (GDP) to $3.619 billion. However, the district's quarterly economic health check has revealed a 41 per cent drop in non-residential application building consents. Christine Allen writes.

When looking at the latest Infometrics Quarterly Economic Monitor for the Whangarei District, almost all economic indicators point upwards, showing positive growth in the district. All indicators except the non-residential building consents.

But the district experienced a development growth spurt in 2013/2014, which is proving hard to match again this year.

The provisional estimate from the latest Infometrics Quarterly Economic Monitor for the district revealed GDP was at $3.619 billion for the year to the end of June 2015, with a 12-month increases in traffic flow (7 per cent) and retail trade (4.7 per cent) and a drop of 0.9 per cent in the number of jobseekers.

GDP is the market value of all goods and services produced by the region's economy.

The only key indicator to show a decline was in non-residential consents, which had plummeted in value by 41 per cent in the 12 months, compared with a 14 per cent drop regionally. There were $36 million worth of consents issued in Whangarei in the 12 months to the end of June.

In 2013/14, there were applications from Countdown Regent, which opened a new building in 2014, while Quest Apartments also constructed its new flagship building.

Moving out the CBD were Pacific Motor Group, Toyota, Placemakers, Mega Mitre10 and Marine North, while a number of new developments spring up on Kioreroa and Rewa Rewa Rds.

Peter Gleeson, economic development manager at Whangarei District Council, said, however, that the drop in non-residential applications just means levels are back to normal.

"We are now seeing non-residential application levels returning to the norm whilst there is an increasing trend in residential," said Gleeson, adding that the 2013/14 year saw "an extraordinary amount of non-residential development within Whangarei."

Although these consent figures are down this year, the positive impact of those projects are being felt.

Gains

There were massive gains in housing, as house sales lifted by 11 per cent, with 1436 houses sold in the district in the 12 months to June, outperforming the national increase of 8.3 per cent. Median house prices jumped by 4.6 per cent and stood at $317,825 by end of June - close to regional increases of 4.5 per cent.

The rising house prices had resulted in an increased interest in new builds, with 77 new residential building consents issued in the June quarter, up from 53 for the same period last year. Favourable mortgage rates would add support to housing demands, as would an increase in Aucklanders seeking more affordable housing in Whangarei.

The main housing challenge now, however, is a lack of stock.

"Vendors are wanting to secure a replacement property before selling, therefore creating a reluctance," Gleeson said.

Demand had increased because of the migration of people into Whangarei district, along with non-resident investors.

"There is a greater demand on supply of available stock of houses on the market," he said.

Gains were also experienced in the indicators which reflect positive tourism growth, such as the spike in guest nights, with a lift of 7.9 per cent in the district in the year to June 2015, with visitors staying a total of 527,455 nights during those 12 months.

"The Fifa U20 World Cup had a significant part to play; also international arrivals into NZ at an all-time high on the back of the increasing health of the global economy post the global financial crisis," Gleeson said.

"High levels of business and commercial travel as a result of business confidence" was also given as a reason for the growth.

A weaker dollar also increased the "purchasing power" of international visitors to the area, which had also seen a boost in traffic flow (7 per cent) largely because of extra cars travelling Whangarei's tourist trails.

"In the more recent months the lower NZD has assisted, as travellers make plans in advance; the high levels of international arrivals are expected to continue despite some market corrections recently evidenced in China."

The NZ dollar value had lifted the competitiveness for timber prices, although weaker log prices were placing pressure on the forestry industry.

Low dairy prices would see dairy farmers spending less on "non-essential expenditure in the city", however, while NZD was boosting returns for meat, wool and fruit exports.

Migration

Against the backdrop of a net migration spike, which would reflect better job prospects in the district, the number of jobseekers had fallen by 0.9 per cent over the past year.

There was an average of 3461 people on Jobseeker Support in the district in the 12 months to the end of June.

The economic health check also reported an increase in people moving to the district from other parts of Northland.

Whangarei District experienced a permanent and long-term net migration gain of 414 persons in the year to June 2015, compared to the gain of just 22 in the previous year.

"Permanent and long-term" net migration included ex-pat residents returning, Gleeson said, "from the mines in Australia back to Whangarei on a permanent basis".

"The newbies are generally those who bring skills and have migrated to Whangarei for a specific job and intend to settle and stay permanently. "Whangarei is experiencing a growing population and more recently is evidencing an inflow as a result from the Auckland housing market," Gleeson added.

Electronic card spending was up by 4.7 per cent, too, compared with a 2.3 per cent national jump.

Meanwhile, Whangarei experienced a 19 per cent jump in car registrations, at 2912 cars, attributed in part to the net migration inflow and higher employment rates. Commercial vehicle registrations jumped by 18 per cent, with 938 registrations in the 12 months.

Northland's overall GDP saw a 2.9 per cent lift, with the biggest increase seen in house sales (12 per cent), car registrations (16 per cent) and commercial vehicle registrations (22 per cent).

The report was compiled by Infometrics, a privately-owned company that provides regional and industry-specific economic and demographic information to local authorities, development agencies and industry.