Auckland now gloomiest region in NZ

• Published date: 26 January 2023

The Westpac McDermott Miller Regional Economic Confidence survey found ongoing rises in interest rates and the cost of living, as well as falling house prices, have weighed on confidence across the regions

“In fact, households’ confidence in their regional economies is now in negative territory in every region,” said Westpac acting chief economist Michael Gordon.

Waikato posted the largest fall with record-low farmer confidence likely having spilled over into weak household confidence, Gordon said.

Northland and Auckland remain-ed the most negative regions in the country as rising interest rates and cost-of-living increases bit hardest.

“From here, we expect that confidence will remain under pressure as rising interest rates and costs of living plus falling house prices combine to put the squeeze on households.

“Meanwhile, regions that are benefitting from the return of tourists and agriculture-focused regions may fare better than others,” he said.

The Nelson/Marlborough/West Coast Household region posted the largest nationwide lift in the quarter.

AucklandAuckland is now the most negative region in the country, likely driven by pressure on the housing market, with prices falling and interest rates rising.

“Cost-of-living and interest rate increases and are hitting Aucklanders’ wallets hard,” said Westpac senior economist Nathan Penny. “And, if anything, the squeeze on household budgets is about to accelerate as more homeowners and investors roll onto higher fixed mortgage rates over coming months. The Auckland housing market is also at the forefront of the nationwide house price declines, dropping 20 per cent since November 2021. As a result, Aucklanders’ view of their local economy may get worse before it gets better.”

NorthlandNorthlanders remained very pessimistic about the outlook.

No doubt cost-of-living and interest rate increases were being felt acutely but the outlook for the region’s key industries was at best mixed, Penny said.

“Sheep and beef industry returns have peaked and are on the way down, while forestry returns remain weak. Also, confidence in the horticulture sector is likely to have dipped on the back of low and falling returns for avocado and kiwifruit growers, respectively.”

The one bright spot was tourism, with the rebound of international visitors under way.

“We expect the tourism pick-up to continue into the March quarter and through 2023 and 2024 and this may spill over into confidence in the region.,” she said. The financial...