South Island Leads Recovery Southland Shines in Kiwibank’s Annual Report

• Kiwibank’s report shows most regions’ economies are improving, except for Wellington’s ongoing decline.
• Southland leads the country with a strong economic score driven by a construction boom.
• Unemployment is expected to rise across New Zealand before eventually improving.

Kiwibank’s latest Annual Regional Report presents a cautiously optimistic outlook for New Zealand’s economy. Although nearly every region has shown signs of economic recovery, Wellington continues to struggle due to public sector cuts.

Kiwibank Chief Economist Jarrod Kerr described 2024 as a year of gradual improvement, saying, “We’re still very much in a challenging economic environment. But the overall outlook continues to improve, particularly with the anticipated interest rate cuts expected to breathe new life into a rather deflated economy.”

Southland emerged as the top-performing region, earning a score of 5 out of 10. The region’s success is largely attributed to a surge in the construction sector, with residential building consents increasing by 46% this year. “Southland’s construction sector has ramped up,” said Kerr, highlighting the region’s standout performance. Read the Kiwibank report.

In stark contrast, Wellington recorded the lowest economic score in the country, with a 2 out of 10. The region’s struggles are linked to government spending cuts and job losses that have severely impacted the local economy.

Kerr also warned of impending unemployment increases, stating, “Unemployment rates tend to lag economic scores by about nine months. We’ve seen nearly all regions just start to improve their scores, meaning unemployment rates will likely continue to worsen in the coming months before they get better.” While some regions, like Taranaki, Gisborne, and Hawke’s Bay, have seen employment growth, others have experienced a slowdown, with Wellington’s employment already in decline.

House prices, however, are showing signs of recovery across the country. Kerr noted, “After house prices stabilised in 2023, we’re now seeing modest house price growth across every region of New Zealand.” Despite previous significant declines, Auckland and Wellington are beginning to recover, while Canterbury has seen a more modest decline and subsequent recovery.

Yet, the report also highlights a decrease in building consents in most regions, which could lead to future supply constraints and upward pressure on house prices.