Hous­ing mar­ket boost­ing wider econ­omy

Central Leader - - NEWS -

The great Kiwi love af­fair with hous­ing shows no sign of slow­ing down and that’s cer­tainly born out by Auck­land’s ram­pant mar­ket. And it’s not just buy­ing and sell­ing homes or build­ing new ones that is prov­ing pop­u­lar. As prices soar, many of us are also stay­ing put and in­stead spend­ing some money on our cur­rent digs - mak­ing them the dream home we’ve al­ways wanted.

Strong house price growth across the Auck­land re­gion is boost­ing other parts of the econ­omy in­clud­ing con­struc­tion, fi­nance and real es­tate in­dus­tries, ac­cord­ing to lat­est eco­nomic fig­ures for the re­gion in the first three months of this year.

Eco­nomic ac­tiv­ity is now more sus­tained and broad based, with 17 out of 20 sec­tors record­ing gains in the quar­ter.

Auck­land grew at a rate of 3.2 per cent in the year to March; along with Christchurch, th­ese two cities are un­der­pin­ning growth across the coun­try ac­cord­ing to Ge­off Cooper, Auck­land Coun­cil’s chief econ­o­mist.

Mr Cooper says ac­tiv­ity in Auck­land’s con­struc­tion, fi­nance and prop­erty sec­tors will likely spill over into other parts of the re­gion’s econ­omy, and with time, other ar­eas of New Zealand.

‘‘Auck­land house prices con­tinue their up­ward march, which is buoy­ing con­sumer con­fi­dence and fur­ther stim­u­lat­ing de­mand,’’ Mr Cooper wrote in the lat­est Auck­land Econ- omic Quar­terly, re­leased this week.

‘‘We’re al­ready see­ing a pick-up in ac­tiv­ity across the fi­nance, prop­erty and real es­tate and con­struc­tion ser­vices sec­tors. As build­ing work gath­ers pace, it will act as a cat­a­lyst for growth in var­i­ous down­stream sec­tors, par­tic­u­larly do­mes­tic man­u­fac­tur­ing and re­tail.’’

The me­dian Auck­land house price was $562,000 in March 2013, up 12.5 per cent from March last year. Signs that mi­gra­tion is re­bound­ing, amid the slow­ing Aus­tralian econ­omy, are likely to sup­port house prices in the medium term.

Some 4764 res­i­den­tial build­ing con­sents were lodged with Auck­land

Coun­cil in the 12 months ended March 31 this year. While that’s down from the 10-year aver­age of 6631, it is up from the year-ear­lier fig­ure of 3976. This rep­re­sents the early stages of a con­struc­tion up­swing in Auck­land, which will need to con­tinue be­fore house prices ease.

Auck­land’s con­sumers are among the most op­ti­mistic in New Zealand, spurred on by ac­tiv­ity in the hous­ing mar­ket. West­pac McDer­mott Miller re­ports a con­sumer con­fi­dence score of 119.0 for Auck­land, well ahead of the national aver­age of 110.8, and up 13.7 per cent from Q1 of last year. Re­tail sales rose 1.1 per cent from the fi­nal three months of 2012, and new car reg­is­tra­tions in­creased again to just shy of the 10-year aver­age.

Still, lack of job growth con­tin­ues to weigh on Auck­land’s re­cov­ery as un­em­ploy­ment re­mains high at 7.3 per cent. With busi­ness em­ploy­ment in­ten­tions in pos­i­tive ter­ri­tory and eco­nomic ac­tiv­ity look­ing more sus­tained, job seek­ers have more rea­son for op­ti­mism.

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