Reasons for optimism about our economy
The rime minister’s recent state of the nation address painted a gloomy picture, but there’s much to be optimistic about in Christchurch. The air of recovery and revitalisation around much of the city is extending to international visitor numbers, which are providing a boost for Christchurch’s economy. Monthly international visitor spending in Christchurch hit an all-time record of $46.1 million in December.
With the appetite for overseas travel among Americans at its highest level since the 1970s, a strong growth in US visitors is overtaking more traditional markets. From December 2019 to December 2023, the share of monthly international visitor spending by US visitors to the city rose from 17% to 31%.
There are a couple of key factors that seem to be fuelling the recent growth. Research last year by economic research organisation Conference Board showed more than one in five Americans planned on visiting in a foreign country in the near future, the highest share since records began in 1978.
The second key factor is the opening of United Airlines’ new Christchurch-San Francisco route in December last year. Flying three times a week, it’s the first ever direct flight between Christchurch and San Francisco, and the only direct flight between the South Island and the US.
While that injection of overseas spending is great news, it sits alongside data showing reduced spending by locals.
From December 2022 to December 2023, retail spending in Christchurch (captured by instore spending from electronic card transactions) fell by just over $16m – despite a $13m bump in spending by international visitors over the same period. Cantabrians, like the rest of the country, are spending less on non-essential goods and services, with the biggest hits seen in home and recreation retail. We’re buying less furniture, sports equipment, electronics and the like. We’re also spending less on things like clothing, footwear and jewellery.
That drop in local spending reflects the mood of consumers in general. Kiwis are focusing on the basics, with Westpac’s Consumer Confidence survey for the final quarter of 2023 finding that attitudes towards making major purchases remain unenthusiastic.
On the plus side, Kiwis are optimistic about the year ahead – expectations around future economic conditions and personal finances have risen in recent months – although that has yet to flow through to increased spending.
Consumer confidence in Canterbury is now sitting a touch above that of New Zealand as a whole. While still net pessimistic, both national and regional scores are at their highest levels since early 2022. Business confidence has also improved, with Business Canterbury’s latest quarterly business survey finding that 85% of Canterbury businesses expect the region’s economy to be the same or stronger in 12 months.
There’s also been an upward trend in the housing market. After a year of negative growth, Christchurch house prices turned positive in October. As of December, the median house price in Christchurch was $670,000, up 3.1% from the same month in 2022. House prices peaked lower and later in Christchurch than the other major centres and declined at a slower rate over the subsequent months. Christchurch’s median house price in December 2023 was 8% or $61,000 lower than its February 2022 peak.
Meanwhile, median house prices in the Wellington and Auckland regions during December were around 19% lower than their respective peaks in October and November of 2021 (equivalent to declines of $193,000 and $250,000 respectively).
With affordability constrained around the country, we shouldn’t expect a surge in house prices anytime soon as it appears the housing market is becoming more stable.