ASB's measure of Canterbury's post-earthquake economic recovery is showing indications of a stalling in momentum for the region.
ASB chief economist Nick Tuffley said the bank's 'Cantometer' index measuring how the region is recovering and rebuilding from the earthquakes, remained steady again in October, sitting at 1 (zero marks the level of activity prior to the earthquakes).
"After experiencing rapid improvement since late last year, the Cantometer index has remained flat over the past three months," he said.
"Indicators suggest activity continues at a high level, but the pace of growth appears to have eased. This may indicate bottle necks are starting to emerge in the Canterbury rebuild process."
The results back up growing evidence elsewhere that activity might be, if not stalling the flattening, in Canterbury - noticeably from the last NZIER quarterly survey of business opinion. NZIER principal economist Shamubeel Eaqub said at the time that "this is just a warning sign there's something going on with the Canterbury rebuild that's not quite right".
Tuffley said growth in building consents in Canterbury appeared to have "stalled" after lifting strongly over the past year.
"The recent trend in building consents suggests construction activity will soon start to level off, although at high levels."
Tuffley said the recent results from Canterbury raised a question: "Are the flat results due to a temporary lull in activity before the upward trend resumes, or a larger issue where bottle necks may be starting to impact?
"...We assume further lifts in consent issuance from here, but if the upward trend does not resume soon a closer look at capacity constraints and reducing bottle necks in the region may be needed."
Further housing construction was required to alleviate housing shortages in Canterbury, he said.
"Housing data continues to indicate the housing market is supply-constrained with low levels of new listings constraining the level of turnover. Adding to the squeeze, the net migration influx will continue to exacerbate current housing shortages."
Canterbury consumer confidence was also somewhat soft over the September quarter, lacking the usual seasonal increase, Tuffley said.
"The result was surprising and suggests spending growth may remain flat heading into the second half of 2013."
Tuffley did, however, expect further growth in retail spending over the coming year.
"Continued population growth and a lift in incomes will continue to underpin stronger retail demand."
The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publicly available regional economic data, which are standardised and aggregated into a summary measure. The index has been rebased to zero in June 2010 (the end of the quarter immediately preceding the first earthquake) such that a positive number represents activity being above pre-earthquake levels.
10 Comments
There are many economists trying to calculate or model what is going to happen down here with old dated models or theories. Our situation is brand new and has not happenned in NZ - except maybe Napier but in a different era.
I suggest they spend some time here talking with people. Yes houses are needed, but consents don't just mean houses anymore - just ths start of a long process to argue with insurers, builders, etc.
My view is the new city will take a lot longer than the early predictions - nearly 3 years in and little being built or planned, just lots of arguments from interested parties.
There is no way insurance payouts will reach $30 billion now. Certainly insured damage is greater than that, but with the assistance of EQC, private insurers are now offering just fractions of repair costs and if they are doing repairs they are not to the insured standard, ie floors are not being levelled and definitely not being put back as new, chimneys are not being replaced and in most cases EQC are opting to bodge up damage without proper consents.
But who has the time or money to complain? Only a few hundred cases currently before the high court - the rest are just grudgingly accepting defeat.
In many cases houses that should be rebuilds ($400k plus) are being offered cash settlements at $100k-$150k and choosing to take them and sell their property as is and not end up much worse off than if the earthquake hadn't happened - but for every property like that not one cent is actually going to be spend in the city, and of course the city is no better off except that it now has another slightly cheaper uninsured house!
My view is that most of the money has already escaped and much of that is due to the Government's and EQC's handling of claims.
Realistically if a further $5b is ever spent beyond what would normally have been spent in the city (with no eq) and the Central Government "think big" projects, then I would be surprised.
In the Press today, they are already talking of office oversupply and that's with 90% of the former CBD still being a wasteland.
NZ has seriously been let done by Brownlee and the Nats. There will be no boom, just a period of slightly better than normal construction.
I'd incline to Craig's view: a lot of 'rebuild' work is in fact 'refurbish' work being undertaken via Schedule 1 or 1a - non-consented as low risk, non structural, not a building (paths, fences, drives) which won't show in consents at all. So there's an elem,ent of 'measuring the wrong thing' here as well.
Insurance contracts are a) individual contracts and b) terra nova insofar as they were constructed for a single event only, not a series of four major (4/9/2010. 22/2/2011, 13/6/2011, 23/12/2011) and a host of minor events which all contributed to the damage. So Brendon's implication that Gubmint can somehow relitigate tens of thousands of contracts, to a satisfactory outcome for all parties concerned, is able to be seen for what it is: pixie dust and unicorn grease.
The rebuild Will take much longer - and this is the standard experience (try reading Simon Winchesters 'The Crack in the Edge of the World' re the 1906 San Fransisco quake - same stories about insurers, same timelines, same frustrations.)
But a longer, less lumpy process, while wearing to those few directly involved (5-10% of the population, tops, say 20-30K people) is in fact a better process. It's the peaky, boomy busty ones that cause real bottlenecks and pressure points.....
Glass half full.
Waymad I try to be optimistic, but not blindly so.
So if the stats are showing a slow down in rebuilding and that coincides with claimants experiences of delays and unknown timeframes with the unstated but clearly intended message that the claimant should take a smaller cash payment now rather than a larger valued rebuild at an uncertain point in the future. I believe it.
This could have been sorted out by a proper independent onboardsman or a rule that claims need to be settled by a certain date. They did this Queensland after the floods and in the US after disasters.
Further if the National party had put in affordable housing policies in 2008 as promised then the rebuild would not be so expensive and the reinsurers would not be so p..d off.
If New Zealand was like Japan and thought ahead we could have agreed that the Canadian or some other countries Building code was ok for us too, allowing materials and flat packed housing to bypass logjams in rebuilding.
If Brownlee had compulsory purchased and rezoned the equivalent area to the red zone we would not have such inflation in residential land, like the following new town idea.
Some day the story of Canterburys earthquakes will be told and I don't think it will make good reading.
Inside word that I've heard is that great chunks of Parklands and some other suburbs, shoulda been red-zoned too, just on account of the ground conditions (Travis Swamp....)
But that woulda been another 3-4000 houses, at say RV of $3-400K each, is another $1-2 billion the Gubmint woulda hadta pony up.
Too expensive. And, where da ya stop? Still pockets of bad TC3 land outside that too. Flockton Basin is a classic example - has sunk around 40-50cm, foobarred the fall in the stormwater drains, do ya raise all the houses, red-zone it, give 'em all Gumboots, or tell 'em all to Harden Up?
Say $3 billion. About a Meridian-and-a-half. And Southern Response (Crown entity) liability is still not completely nailed down - could be more tax munny yet.
Election next year.
What to do, what to do....well, you can certainly see what's Been done.
Its a myth - the damage to Parkland's building was not as bad as the redzoned ones. Other issues contributed to redzoning too like out at Brooklands - infrastructure costs, end of the line. Brooklands sunk a heap, as did Bexley, lateral spreading in a lot of other red zoned places. Parklands was TC2/TC3.
Bower Ave around Rue (aka Lake) De La Mere had some of the worst liquefaction and earthquake induced flooding in Christchurch.
Much of the red zone such as along the west end of River Rd should not have been redzoned and is better than many TC3 areas.
The red zoning has cost the Govt hundreds of millions more than they thought as the insurance companies aren't paying out on a huge proportion of the houses that they have acquired. It was a disastous mistake because it allowed IAG and others out of hundreds of millions in liabilities (claiming houses are repairable but sorry we can't repair in the red zone...).
So many liveable houses have been wantonly demolished in marginal areas that should not have been redzoned that I reckon they wasted at least a billion dollars (4000 homes at the market rate of $250k each for a written off sunken house).
Absolute craziness on behalf of the Govt.
- recovery ?? shes still wobbling down there,man ...
- Public Id: 2013p817946
- NZDT: Thursday, October 31 2013 at 4:21:54 am
- New Zealand region intensity ?: moderate
- Maximum intensity ?: strong
- Depth: 9 km
- Magnitude: 4.2
- Location: 20 km west of Christchurch
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