Gareth Kiernan says the next two years will see Northland's population increase, its tourism industry flourish but the full impact of fluctuating dairy prices had yet to be felt. Photo / John Stone
Gareth Kiernan says the next two years will see Northland's population increase, its tourism industry flourish but the full impact of fluctuating dairy prices had yet to be felt. Photo / John Stone
A continued tourism boost and population growth from Auckland will be the biggest factors contributing to Northland's economy over the next two years, according to one of the country's leading economic forecasters.
Gareth Kiernan, chief forecaster for Infometrics, the private firm which provides economic data for local authorities, believes anupward trend in Northland's tourism industry would continue in 2016 and 2017.
Early indications showed that for the September 2015 quarter, guest nights were up 6 per cent on the same quarter last year, he said. An increase in flights to Auckland, cheaper fuel prices decreasing international flight costs, and a boost in visitors from China will continue to benefit regions like Northland, said Mr Kiernan. The spilling population from Auckland would combine with continuing surges in house sales, as Northland's sales were up 70 per cent from the same quarter to October in 2014.
"There are two main drivers - people relocating to Northland for a better lifestyle and affordability, and investors buying up better properties for less. The Auckland sales market will slow ... the Northland market is heating up."
He said the exodus from Auckland was contributing to population growth, in the region witnessing the largest growth in 12 years with figures up 1.4 per cent to June 2015, an additional 2300 residents. According to Statistics NZ's population estimates for June 30 last year to the same time this year, population increased by 1500 people (1.8 per cent) in Whangarei, 300 people (1.4 per cent) in the Far North and 500 people (2.3 per cent) in Kaipara.
But the region had yet to feel the impact of plummeting dairy prices, which will be compounded by the potential onslaught of the El Nino weather pattern, due to make itself felt this summer, Mr Kiernan said.
"The impact of this has yet to filter down. If the dairy payout was a once-a-year issue, farmers would borrow but when it's a multi-year drop, the follow-on effects will be felt, in everything from less fertiliser being used to on-farm maintenance ... impacting on agricultural services and suppliers."
The region will start to come out the other side in 2017, he said. He believed dairy prices would settle again at $6/kg of milk solids in two to three years and said El Nino was likely to deliver a blow to dairy production in the region.
El Nino would also hit beef production, increasing supply next year and resulting in lower prices, but production would fall again in 2016 and 2017.
Other factors that could influence the region were the "positive central government investment" in the Puhoi-to-Wellsford project and rural broadband rollout. Until the ongoing skills shortage in the region was fixed, jobless figures wouldn't change, he said.
