Economic confidence survey shows Bay of Plenty households remain pessimistic

By Zoe Hunter

Bay of Plenty Times·

9 Oct, 2022 07:00 PM4 mins to read

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The Bay of Plenty's economic confidence climbed just two percentage points to -6 from -8. Photo / Getty Images

A weak forestry sector, falling housing market, and rising cost of living are expected to dampen the confidence of Bay of Plenty households for a while yet, experts say.

The Westpac McDermott Miller Regional Economic Confidence Survey showed households' confidence in their region's economy couldn't shake the blues over the September quarter.

The Bay of Plenty's economic confidence climbed just two percentage points to -6 from -8.

Westpac acting chief economist Michael Gordon. Photo / Supplied

Westpac acting chief economist Michael Gordon said it was a "patchy result" by region over the quarter.

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"Seven regions posted lifts in confidence, while four regions posted falls.

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"Northland and Auckland remain the most negative regions in the country. There, the weakening housing market and cost-of-living increases continue to bite hardest."

Meanwhile, Wellington, Waikato and Southland posted the largest improvements in confidence.

"From here, we expect that regional economic confidence will remain split along lines of regions who are benefitting from strong agricultural incomes and the return of overseas tourists, and regions who are battling the worst of the weakening housing market and cost-of-living increases."

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Gordon said news Zespri had cut kiwifruit grower returns may have been one factor contributing to ongoing pessimism among Bay of Plenty households.

"In addition, forestry sector returns remain weak, although export prices have picked up a touch over recent months."

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The local housing market, like the rest of the country, continued to weaken with house prices falling more than 6 per cent since November, he said.

"With this and ongoing cost-of-living increases in mind, we expect pessimists to continue to outweigh optimists in the region over coming quarters."

Zespri chief grower, industry and sustainability officer, Carol Ward. Photo / Jamie Troughton / Dscribe Media Services

Zespri chief grower, industry and sustainability officer, Carol Ward, said its last forecast grower returns reflected the challenging conditions being faced this season.

"Like many other industries, we're seeing rising costs through the supply chain - particularly around freight, dealing with an ongoing labour shortage, and needing to manage fruit quality.

"While it's a challenging season, we're encouraged by the demand we're seeing for our fruit, and we're continuing to work hard to tackle these challenges so we can continue to bring value back to our industry and our community."

Chief executive officer of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young. Photo / Supplied

Chief executive officer of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young said continued inflationary pressures on households and the impact of rising interest rates for mortgage holders was having a lot to do with household confidence at the moment.

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That was causing buyers to pause and take their time, which had meant fewer deals transacting per month when compared to long-term averages, he said.

"This is having an impact on pricing due to demand being less than supply."

But Young said he believed the outlook remained positive for the housing market as the Bay of Plenty remained a highly desirable location to live.

"Despite the recent impact of factors, such as interest rates and inflation, there will be more people wanting to move and invest in the area versus packing up and leaving."

The survey was conducted from September 1 to 12, 2022, with a sample size of 1559.