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Thames-Coromandel economy still a strong performer

05 December 2018

Our Thames-Coromandel economy is still a strong performer when we are compared with the rest of the country, but waning house prices is something to watch out for, an economist warns.

The latest quarterly economic data release from economic development agency Infometrics reveals Gross Domestic Product (GDP) in Thames-Coromandel grew 3.8% in the year to September 2018, slightly above the 3.5% growth rate for the wider Waikato region and well above 2.9% growth rate nationally.

Our economy has now been growing at an above-average growth rate for more than three years. The strong performance is helping to create jobs in our region and an average unemployment rate of 2.9%, well below the national average of 4.3%.

However, new data for the three months to Septembe, suggests there are some red flags in our local residential property market, says Infometrics senior economist Benje Paterson.

House sales and residential consents fell again in the last three months to September, and house prices dropped for the first time since 2013.

Looking at the year as a whole, house prices fell 4.1% in the September 2018 year, bucking both national and regional trends.

“It’s not a huge concern, but it’s something to watch because housing is a big part of the local economy,” Benje says. “House prices can be a signal of what people do in the property market and how confident they feel about things."

House sales have also been falling around the country since mid-2016, Benje says.

“In the September 2018 year they fell 12 per cent. However, results for the last three quarters have been flat, which could mean sales are about to turn the corner,” Benje says.

"Residential consents declined 12% in the September 2018 year, greater than the 2.2% fall across the Waikato region and in contrast to 5.4% growth nationally. But the district’s 17% rise in non-residential consents in the September 2018 year will help keep local construction firms busy," he says.

The latest QV House Price Index by Quotable Value indicates house price growth has slowed in many parts of the country. Nationally, property values lifted 1.3% over the three months to November. They were up 3.5% over the year. Read more here:

Visitor spending hits new highs

Visitors spent an unprecedented $374 million in Thames-Coromandel in the September 2018 year – a historic high and up from $351 million a year ago.

However, our share of total visitor spending growth is not quite as good as in other parts of the country. At  6.6%, our growth rate is weaker than other regions such as Waikato (7.4%) and Queenstown-Lakes District (12.6%).

One reason for this is that the greatest share of visitors to Thames-Coromandel are from the domestic market, which is more greatly impacted by high petrol prices.

With the summer and the peak visitor season up ahead, the outlook for the region was positive, Benje says.

Growth in visitor numbers on the Hauraki Rail Trail sends a strong signal, with total trail users well up on last year. Numbers on the Waikino to Karangahake section of the trail alone have increased to 44,160  in 2018, up from 30,609 in 2017.

Our Mayor Sandra Goudie says the international visitor market continues to be an area of opportunity for Thames-Coromandel, confirming the importance of strong connectivity through our roading network and broadband.

"Our share of the international visitor market will rise as people find what they are looking for here," Mayor Sandra says.

"Investment in the hotel sector is an example of development that will elevate the level of service in our economy.

"Until the proposed resort in the Whitianga Waterways comes on stream, we  have just one international hotel for the entire district, based in Pauanui," Mayor Sandra says.

Overall, Mayor Sandra says its positive to see the Thames-Coromandel economy tracking well above the national average, with sustained growth filtering through to the local economy.

"Tourism continues to be a huge economic driver for us, which is why it's great to have hosted things such as the Coromandel Food Forum and the inaugural Tracks and Trails Forum recently, which brings sectors within our tourism space together to look at how we can work together to build and improve on our offering," Mayor Sandra says.

Thames-Coromandel District Quarterly Economic Monitor - September 2018

HIGHLIGHTS:

GDP: +3.8%
Traffic flows: +6.5%
House prices: -4.1%
House sales: -13%
Residential consents: -12%
Guest nights: +2.8%
Retail trade: +7.6%
Tourism spend: +6.6%
Jobseeker support recipients: -3.9%
Unemployment rate: 2.9%

If you want more detail on our latest economic quarterly data for our district go to our website page here.

Our Council uses Infometrics to provide industry, regional, and general economic analysis and forecasts, which helps to inform us when we make planning, policy, and strategic decisions.

Read more about our Council's  Economic Development Strategy 'Towards 2028' here.