Close
 

Household spending slows

  • Opinion
  • January 10, 2019
  • Paul Clark
Household spending slows

Household spending has cooled and despite signs of a recent improvement is likely to continue to slow in the future.

New Zealand has been in the grip of a slowdown in consumer spending since mid-2016. However, there have been recent signs of a pickup, mostly likely due to recent increases in government social payments to low income families, super annuitants and beneficiaries.  

With the housing market slowing and net inward migration pulling back, it is likely that the pace of household spending will continue to weaken in coming years.  

The pace and timing of this spending slowdown, however, is likely to differ by region. Those that have strongly performing housing markets, faster growing populations, and successful export industries (including tourism) are likely to see stronger spending growth for a longer period of time.  Those that don’t are likely to see weaker spending growth.   

House prices have a strong bearing on consumer spending. In some regions, the dynamics in the housing market are already well set. Auckland and Canterbury are good examples of this, with house prices in both regions either flat or falling.

However, this is not the case in all regions. Rural regions like Taranaki/Manawatu-Whanganui, for example, have actually seen accelerating prices, while Gisborne/Hawkes Bay and Otago have also been standouts, posting near to double-digit growth house prices. Meanwhile, Wellington, has easily outperformed its metropolitan counterparts.   

These regions are also experiencing stronger population growth than they used to. This, together with rising house prices, is likely to be supporting spending in these regions.  Wellington, is likely to be further boosted by increased spending by the Government on the public service. Not so for Auckland and Canterbury, where population growth has dropped due to a larger number of temporary international migrants heading home and some Kiwis moving within the country.

Rural regions should also be benefitting from still elevated commodity prices and a slightly weaker New Zealand dollar. Higher production volumes will also be lifting farm-gate incomes, and as a consequence, rural spending. 

Most regions in New Zealand will be benefitting from an increase in tourist arrivals, although signs of a slowdown are becoming increasingly evident. Tourism spending continues to grow strongly in traditional hotspots like Otago and Southland as well as in less traditional tourist destinations, such as the Waikato and Wellington.  However, in places like Nelson/Marlborough/West Coast and Gisborne/Hawkes Bay, tourism isn’t performing quite as well.  

Consumer spending outside Auckland and Canterbury may stay relatively strong for a while yet. But for businesses in these regions it is very important to understand that today’s economic exuberance has partly been driven by a burst of population growth and rising house prices that will not persist forever. When population growth slows construction activity in these regions will drop away, meaning fewer jobs locally. And when house prices stop rising at a double-digit pace, the wind currently in consumers’ sails will drop. Enjoy it while it lasts, but it will not last forever.

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 

Good things to those who wait: Ikea announces Auckland flagship

  • News
  • January 11, 2019
  • Courtney Devereux
Good things to those who wait: Ikea announces Auckland flagship

In an official launch of Ikea New Zealand today, hopeful consumers were taunted yet again as location, price points, and opening dates were kept under wraps.

Read more
 
 

Retail year book 2018: Part six

  • In Association with Retail Leaders Forum
  • January 7, 2019
Retail year book 2018: Part six

Congratulations! You made it through another year in retail and our team has reflected on the year that’s been to create this yearbook. In part one we see the biggest industry trend for 2018 and the most hyped arrival.

Read more
 
 
Sponsored content

What the online shopping boom means for your customer deliveries

More and more Kiwis are heading online to get their Christmas shopping sorted. This shift in purchasing behaviour has huge implications on retailers and their ...

 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 

Retail year book 2018: Part five

  • In Association with Retail Leaders Forum
  • January 4, 2019
Retail year book 2018: Part five

Congratulations! You made it through another year in retail and our team has reflected on the year that’s been to create this yearbook. In part five we see the most impressive campaign and the best mascot.

Read more
 
 

Retail year book 2018: Part four

  • In Association with Retail Leaders Forum
  • January 3, 2019
Retail year book 2018: Part four

Congratulations! You made it through another year in retail and our team has reflected on the year that’s been to create this yearbook. In part four we see the most futuristic premise and the best quote for 2018.

Read more
 

Retail year book 2018: Part three

  • In Association with Retail Leaders Forum
  • January 2, 2019
Retail year book 2018: Part three

Congratulations! You made it through another year in retail and our team has reflected on the year that’s been to create this yearbook. In part three we see the weirdest collaboration of brands and ‘Marriage made in heaven’ award for the most natural merger.

Read more
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}