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Waipa District Economy Report March' 21

Via Steve Tritt Business Development Manager WAIPA DISTRICT COUNCIL and INFOMETRICS

NATIONAL ECONOMY
Gloomy predictions of a 4.6 percent drop in gross domestic product, almost three time worse that 2009 in themiddle of the global financial crisis, did not eventuate.

NZ’s economy shrank, but GDP held to a 1.7 fall. Instead of contracting as previously predicted, the Government now believes that the economy will get back to a pre-pandemic growth rhythm. More economic activity means the Government can collect more in taxes. Treasury now estimates a
return to surplus as early as 2027 ahead of last year’s prediction of 2033


SOCIO-ECONOMIC SITUATION

Update on key local economic outlook for the Waipa council area.

Economic activity indicators in Waipa continue to improve further, with recent March 2021 quarter data from Infometrics showing a further improvement in economic activity, with Waipā’s economy sitting 0.1% below Q1 2020 levels (compared to a 0.3% national decline), taking annual activity to
the same level as the 12 months to March 2020.

As seen across most of New Zealand, the lack of international tourists saw the economic recovery falter slightly at the start of 2021, but a reduced importance of international tourism activity over the rest of 2021, coupled with firm primary sector expectations, will support Waipā’s growth.

Latest economic figures as reported by Infometrics – GDP growth and consumer spending:

Spending outcomes in Waipā remain better than the regional or national average, with Marketview data and Infometrics analysis showing card spending rose 6.6%pa in the December 2020 quarter and then 4.8%pa in the March quarter (even as nationwide spending fell 1.4%pa in the March quarter).
Outside of the Level 4 lockdown in Q2 2020, spending activity has rebounded well in Waipā.

Overall spending activity shows solid economic foundations and a willingness to continue spending and investing locally. Both passenger car (+21%pa) and commercial vehicle (+59%pa) registrations were up strongly and above national growth rates, which signals still-firm investment willingness from businesses and households (vehicle registrations can provide an insight into investment
intentions and sentiment).

Infometrics advises that they expect growth outcomes for the national economy could be more sluggish
in 2021 as the lingering effects of COVID-19 subdue some economic activity, and supply chain issues and skill supply could also restrict or limit the speed of recovery nationally.

Update on residential/ commercial construction, pricing developments.


House price growth in Waipā remains strong but growing at a slower rate than
the rest of the region or the national average. In the March 2021 quarter, house price growth (13%pa) tracked sideways even as regional and national price growth accelerated further ahead. Average Waipā house values are sitting 16% below national averages.

House sales have risen in Waipā over the last year in line with national trends, albeit at a slower pace. Infometrics expects house sales volumes to slow, in line with recent data, as increased government intervention in the housing market (including increased RBNZ LVR requirements and the Government’s housing package in March 2021) see less investor interest and interactions in the housing market.

Residential consent figures are strong, with the quarterly result in March 2021 being the highest total in at least a decade, with Waipā residential consent growth rising at a faster pace than the regional or national average.

Non-residential consent values look worse than they actually are, down 26%pa over the March 2021 year, but this fall is due to a large rise in non-residential consents in the March 2020 year that distorts the trend. Annual non-residential consent intentions remain considerably above the 10-year average, reinforcing strong levelsof commercial building investment.

Are there any issues of note relating to residential property supply and affordability in Waipa?


Infometrics data shows that affordability in Waipā has fallen as the house price to income ratio expanded to 6.0 in the March 2021 quarter. However, Waipā remains more affordable than
the regional or national average. Healthy residential consent profiles will continue to support building work, although capacity constraints (around workers and materials) could result in longer timeframes for actual construction to occur.

Update on immigration/ migration trends.

Local health enrolment growth (a proxy for local population growth) continues to slow, in line with national and regional trends. Enrolments rose 2.4%pa in the March 2021 year, slower than the 3.0%pa seen in the year to March 2020. Health enrolment growth in Waipā remains at a higher pace
than the national average, and with net migration nationally plummeting 93% and expected to remain low for a period, regional/international migration will be a key factor to determine population changes. Previous Infometrics analysis has shown positive net international migration into Waipā, and this trend is expected to continue due to better (relative) housing affordability and increased remote working/Work from Home changes.

Update on local unemployment Jobseeker Support rate

Waipā’s quarterly unemployment rate was estimated at 3.7% by Infometrics in the March 2021 quarter, taking the annual average unemployment rate to 3.1%, compared to a 4.7% average across New Zealand over the last year. Although annual average Jobseeker Support recipients are still rising,
much of this rise is attributed to the early stages of the pandemic. Monthly figures from MSD, analysed by Infometrics, show that Jobseeker Support numbers are slowly falling.

Update on key employers and key employment sectors in the region.


A new employment (by place of residence) metric from Infometrics show 0.3%pa growth for the March 2021 quarter for filled jobs by Waipā residents, compared to a 1.0% drop nationally. Jobs growth on this metrics has slowed in Waipā and elsewhere, although jobs growth in Waipā remains at a higher rate than regional or national comparators.
Infometrics advises that filled jobs growth remains strongest in construction, retail trade, and accommodation and food services industries in March 2021



 

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