Auckland city business and economy report 2008

Executive summary | Past economic performance | Relative international economic performance | Economic structure | Population | Labour market | Retail trade and tourism | Building and property | Inflation, interest rates and the exchange rate | Focus on manufacturing | Focus on Rosebank 2030 | Economic outlook | Auckland city in figures | Download the report

Economic outlook for Auckland city

Factors influencing growth in Auckland city over the next two years include the following:

• Net migration will continue to weaken with the net inflow of migrants slipping to almost zero by mid 2010.
• Residential building activity is expected to decline further over the next two years due to high interest rates, falling prices for existing houses, and slower population growth. However, non-residential building will bounce back in 2009, in part due to construction work ahead of the Rugby World Cup.
• Consumer spending in 2008 will be constrained by high interest rates, rising cost of basic items and declining house prices. Interest rates are likely to fall towards the end of 2008 which, together with tax cuts, will offer some relief to the retail and hospitality sectors.
• The manufacturing industry is likely to remain under pressure during 2008 due to the high exchange rate. The industry will recover from 2009 as the local currency weakens against our major trading partners.
• Growth in tourist numbers will remain low over the next six months, as slower world economic growth and a high New Zealand exchange rate make New Zealand less attractive. However, from mid 2009 we expect tourist activity to bounce back, with a lower exchange rate.

High interest rates, easing net migration, and the weak apartment market have placed considerable stress on the Auckland property market and are resulting in house price falls. A recovery in consumer confidence in 2009 is likely to lead to a more stable performance by the Auckland property market heading into 2010.

Published August 2008