Economic activity in Tauranga City is soaring according to Infometrics’ March 2015 quarterly economic monitor and, with increasing numbers of Aucklanders seeking affordable housing options and a retiring cohort of baby boomers looking to live it up, this period of robust economic growth appears set to continue.
Infometrics Senior Economist, Benje Patterson says “Tauranga’s economy grew by 3.6% over the year to March 2015, backing up growth of 4.4% the previous year. This growth in economic activity was well above growth in the New Zealand economy, which we estimate has averaged 2.9%pa over the past two years.”
What’s even more pleasing for Tauranga is that the growth has been broad-based across most indicators of spending and investment behaviour, which is giving businesses the confidence to go out and hire new staff.
Patterson says “Tauranga’s unemployment rate has fallen to just above 5%, compared with a peak of almost 7% following the economic recession of 2008/09. These improving job prospects are also evident in the falling number of people claiming jobseeker benefits, as well as the soaring levels of inbound net migration into Tauranga.”
Infometrics highlights that these improved pay packets are flowing through into spending in Tauranga’s retail sector, with data from Marketview showing that retail sales in the March 2015 quarter were up 5.2% on a year earlier.
“The retail sales result is even stronger than it looks at first blush, given that lower petrol prices kept a lid on the value of fuel purchases which are a large component of total retail sales,” says Patterson.
“If you look at the number of transactions being rung through the tills, they were actually up 7.5% between the two quarters.”
With Tauranga boasting good job prospects and relatively affordable housing to boot, there has been a sharp lift in interest in the city’s housing market, particularly from those priced out of the Auckland market.
This attention has pushed up the volume of house sales in Tauranga and is also flowing through into house prices and into home building activity.
“Over the year to March, house prices in Tauranga climbed by 5.1%, while residential building consent numbers climbed by 16% over the same period,” says Patterson.
“Consent numbers in Tauranga also look set to rise further over the coming year as increasingly unaffordable housing in Auckland pushes some homebuyers into neighbouring districts.
“A recent tightening of eligibility criteria for investors seeking mortgage financing on existing Auckland properties, could also push up investor demand in places like Tauranga,” says Patterson
The Tauranga City economy is likely to stand up better than most of its neighbours in the face of low dairy prices.
Patterson says “Although some neighbouring districts will suffer from lower dairy prices, Tauranga should be relatively insulated from these issues given that only 2.6% of Tauranga’s GDP is directly generated by the primary sector.
“At the same time any indirect effects on Tauranga’s important ports and logistics sectors will be minimal given that primary sector export volumes are expected to remain stable.”
Furthermore, an aging population is a good reason to keep an eye on Tauranga’s economic pulse over the coming years.
“Tauranga’s health and service sectors are expected to continue experiencing strong growth, due to Tauranga’s large proportion of elderly residents and a retiring wave of baby boomers looking to enjoy their silver years,” concludes Patterson.
The full Infometrics quarterly economic monitor for Tauranga can be found here.
8 Comments
"Tauranga’s unemployment rate has fallen to just above 5%" Do you know why, Benji? Because there is little employment opportunity there, regardless of what you write, and the unemployed have left to go elsewhere in New Zealand! Just as Elizabeth Davies (? Or one of the other contributors who moved to Tauranga. If so, apologies to 'Beth!) who writes on this site how her experience stacks up! Poorly is the answer from what I've read of her on here...
I agree.
I live in Tauranga. I love it here but employment opportunities are not very great.
Unemployed people leave Tauranga simply because it's quite unaffordable to live here.
House prices are very expensive compared to incomes.
Rents are very expensive because of several factors:
1-It's a holiday destination, so many owners decide to use their "holiday" homes in Tauranga during the summer, that restricts offer
2-Being a holiday destination many "investors" prefer to ask a very high rental price despite having the property empty for several months during the year. That's a big problem for tenants like myself here who struggle to find quality homes for long term. Many long term rentals are of very poor condition (so many leaky ones!)
So, yes. Unemployment is low because unemployed people can't simply afford to remain in Tauranga, not because the economy goes that well. Where are the investment opportunities for businesses? Ah yes, real estate and homes for retired people.
Again, the main problem is overpriced land and houses damaging the economy. I pay $490 a week for a rent house with my partner. That does not leave us much spare cash to be good consumers, so the local cafes, restaurants and shops can't be happy with many like us.
With Tauranga boasting good job prospects and relatively affordable housing to boot,
Affordable? really?
http://www.nzherald.co.nz/bay-of-plenty-times/news/article.cfm?c_id=150…
Yes, if you sell your Auckland's overpriced home and move to Tauranga it's certainly affordable. If you work in Tauranga and pay the mortgage from your Tauranga's income, it's far from affordable.
I would also like to see statistics on demography. Could it be that there are less and less young people and more and more retired people so unemployment "decreases"?
Reads like a sales pitch. Aren't ecomomists meant to be objective and rational? Yet only the pros are mentioned, no cons. Exisiting population over 65 (long time has been a retirement haven) eventually dieing?
Also, have a look at the % change GDP graph, 2012-2013 tauranga was growing BELOW NZ average, and as the figure used is based on a YOY change, weak 2012-2013 GDP data will make it easier to grow at a higher rate.
A more accurate (unbias) conclusion would be 'Tauranga shows greater volitility in GDP than NZ overall' , hardly surprisng given its a small sample so numbers going to be more up and down than the NZ average.
Tauranga as a high growth area is a myth. Its dominated my the old and retired and those at school. The remaining working populations struggles in between those demographics. Yes you could sell in Auckland and buy a palace down there, but you can do this almost anywhere else in NZ as well. Reality is lots of small small businesses there, and a small group of larger ones with a very limited and tightly held pool of good well paying jobs.
Had several friends move down with work. Both moved back in less that 3 years because the partner could not get anything other than minimum wage, if you could find work.
Concurr with comments that Tauranga is a rest home, with not a huge amount in between. Some changes are occurring which will retain some of the younger people here in tertiary education like the new Uni campus and the expansion of Boppoly.
Some houses here are just affordable. I brought a do up last year for around 250k. It needs lots of work.
Renting here is a difficult due to what muntijaqi highlights. Plenty of short termers, and alot of dire dumps.
Can't say I get a feel its booming. Maybe if you flick houses or work in elderly care.
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