Queenstown-Lakes District Quarterly economic monitor - June 2019

Overview

Indicator Queenstown-Lakes District Otago Region New Zealand
Annual average % change
Gross domestic product
4.6%
3.1%
2.5%
Traffic flow
2.1%
1.8%
1.5%
Health Enrolments
5.9%
3.7%
1.8%
Consumer spending
5.0%
4.6%
4.0%
Residential consents
0%
1.9%
5.8%
Non-residential consents
55.1%
28.3%
7.9%
House prices*
1.4%
3.3%
1.4%
House sales
-8.5%
0.7%
-0.9%
Guest nights
1.1%
0.3%
1.3%
Tourism expenditure
3.7%
3.6%
3.2%
Car registrations
-13.9%
-7.5%
-8.6%
Commercial vehicle registrations
-0.3%
-4.5%
0.3%
Jobseeker Support recipients
22.5%
2.4%
9.6%
Level
Unemployment rate
1.7%
3.4%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Queenstown-Lakes District

Strong growth continues in the Queenstown-Lakes District, with Infometrics provisional estimates showing GDP growth of 4.6% in the year to June 2019. This has been slowly coming down from a peak in 2016, but still sits nearly double the national average of 2.5%.

Queenstown’s tourism growth is starting to flatten out, with guest nights in commercial accommodation up by only 1.1%pa, although expenditure did grow by 3.7%.

Population growth remains very strong, with health enrolments in the district up by 5.9% in the year to June, ahead of the national rate of 1.8%. Despite strong population growth, the housing market has come off the boil, with house value growth of only 1.4% in the year to June, leading to an average house value of $1.18m. The number of houses sold has come down by 8.5% but is consistent with the long-term average for the district. The construction industry continues to respond to housing demand, with residential building consents holding steady at a high level. Non-residential consents have ballooned out in the year to June, driven by a number of hotel developments being consented. When they come online, these hotel developments may support housing supply by displacing peer-to-peer accommodation in private dwellings.

Queenstown-Lakes unemployment rate remains at an extremely low 1.7%, and has sat below 2.5% for the past decade, while the national rate has flitted around 5%. Jobseeker Support recipients in the district have jumped up, but this is likely to be due to national policy changes around benefit eligibility and sanctions.

Spending in the district grew by a strong 5.0% in the year to June 2019, underpinned by visitor spending growth of 3.7%. Car registrations nationally eased by 8.6%pa, and registrations in Queenstown-Lakes were down by 13.9%. Commercial vehicle registrations were down by a negligible 0.3%pa in the district, potentially reflecting a tourism sector that has shifted from expansion mode to plateau.

Overview of national economy

The New Zealand economy continues to perform well, but concerns are growing about the future, with a long, slow, slowdown expected over the next few years. The Reserve Bank’s aggressive cut to the official cash rate (OCR) to 1.00% reflects a deteriorating economic outlook as both business and government investment remains poor, inflation remains low, and the employment outlook softens. With slowing population growth expected to eventuate before the end of the year, the focus turns to consumer spending and whether it can prop up economic growth, or if it too succumbs to global and domestic uncertainty.