The South Island is celebrating a trifecta of success in ASB’s latest Regional Economic Scoreboard, with Otago, Canterbury, and Southland taking the top three spots for the September 2024 quarter.

The scoreboard evaluates regions based on year-on-year growth across metrics such as employment, retail sales, and building consents.

Otago claimed the number one spot, continuing its remarkable streak as one of the country’s strongest performers. ASB Chief Economist Nick Tuffley attributed the region’s success to the rebound in tourism and strong population growth, which has driven employment and retail sales.

“It’s been great to see Otago go from strength to strength over the past while,” Tuffley said. “It’s impressive to see such sustained growth.”

Otago’s population growth, the fourth highest in the country, has been a significant factor in its economic expansion.

Canterbury secured second place, with population growth second only to Auckland, coupled with strong employment figures and above-average house sales. “Canterbury has had a strong finish to the quarter and is one to continue watching,” Tuffley said. “It’s one of the places to be.”

Southland rebounded to third place after slipping earlier in the year, topping the nation for house price growth with a 4.6% annual increase. The region also ranked fifth for population growth, further cementing its position as an economic powerhouse in the South Island.

While the South Island celebrates, several North Island regions have seen significant drops in their rankings.

•Northland fell from 5th to 13th place, with declining house prices (-1.8%) and reduced residential construction activity contributing to its slump. However, non-residential construction surged by 77.7%, providing some relief. Tuffley highlighted upcoming infrastructure projects, such as the proposed four-lane highway to Whangārei and the Marsden Point energy precinct, as potential catalysts for future recovery.

•Waikato dropped from 4th to 9th, sharing its position with the Bay of Plenty. Despite strong annual house sales growth of 12.4%, the region struggled with challenges in employment and retail sales.

•Auckland continued its downward slide, landing in 14th place. Weakness in the housing market and a loosening labour market have plagued the city, although consumer confidence has begun to improve, aided by interest rate cuts.

Tuffley said Auckland faces significant challenges in 2025, with easing migration and plateauing tourism likely to impact its recovery. However, he expressed optimism for a turnaround in the latter half of the year.

While the national economy remains subdued, Tuffley forecasted a brighter outlook for 2025. “Inflationary pressures are continuing to ease, which has given the Reserve Bank more confidence in its monetary easing cycle. Despite prevailing challenges, there is cause for optimism and for New Zealanders to start looking ahead to how they can thrive in ’25,” he said.

Key sectors such as construction and retail are expected to recover in the coming year, alongside a resurgence in house prices as buyer sentiment improves.