Dunedin City Quarterly economic monitor - June 2018

Overview

Indicator Dunedin City Otago Region New Zealand
Annual average % change
Gross domestic product
2.5%
3.8%
2.7%
Traffic flow
3.5%
4.8%
3.1%
Residential consents
-7.8%
5.7%
7.9%
Non-residential consents
-61%
-31%
10%
House prices*
10.0%
12%
4.9%
House sales
-3.4%
-8.5%
-7.0%
Guest nights
4.1%
3.8%
2.4%
Retail trade
5.3%
7.3%
4.4%
Car registrations
1.0%
4.9%
1.1%
Commercial vehicle registrations
22%
19%
5.4%
Jobseeker Support recipients
-5.6%
-4.8%
0.05%
Tourism expenditure
6.2%
12%
8.5%
Level
Unemployment rate
6.6%
4.1%
4.5%
International net migration
963
1,975
64,996
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Dunedin City

Infometrics’ provisional estimate of GDP shows Dunedin City’s economy grew by 2.5% over the June 2018 year, following growth of 2.6%pa the previous year. Economic growth nationally eased from 3.2%pa to 2.7%pa over the same period.

Spending activity in Dunedin is outpacing activity in larger urban centres, with ongoing population growth and the benefits of higher commodity prices for most exports flowing through into the city. Electronic card spending on retail purchases in Dunedin City grew 5.3% over the June 2018 year, according to data from Marketview. Spending growth nationally was 4.4% over the same period.

Employment prospects in Dunedin have improved. Over the June 2018 year there was a 5.6% decline in the average number of people receiving Jobseeker Support.

Better employment prospects have encouraged both international and regional migration to Dunedin. Data from arrivals and departure cards shows that Dunedin gained a net 963 international migrants over the June 2018 year. Regional migration has also been strong over recent years. An experimental regional migration series from Statistics New Zealand shows that Dunedin gained an approximate net 876 migrants from around New Zealand in the June 2017 year, with more recent evidence on regional migration due to be released with the Census early next year.

Even after recent downward pressure on dairy prices, Fonterra’s current farmgate milk price forecast of $6.70/kgms, is still 70% higher than the disastrous 2015/16 season. Lamb prices recently cracked $8.00/kg for the first time on record, while strong growth in international wood prices has driven up the harvest rate of forests. International prices for horticultural products have been tracking upwards, climbing 14% over the year to June 2018.

House price growth in Dunedin has moderated slightly from a peak 15%pa in 2017 to current levels of closer to 10%pa. Increases in homebuilding activity over the past two years have helped ease some of the extreme pricing pressures. But concerns remain regarding Dunedin’s building sector’s capacity to cope with further growth, particularly given a looming pipeline of large scale commercial work.

Overview of national economy

Most of the New Zealand economy’s momentum over the next 18 months will come from provincial areas, thanks to strong export incomes. Low business confidence suggests that domestically focused firms are already reluctant to invest or hire. Households are also becoming more cautious about their spending in the face of higher fuel prices and the slowing housing market. The New Zealand economy needs the continuation of good export conditions to maintain a solid growth performance.