Economic confidence in Southland climbed back into positive territory over the December quarter, according to the latest Westpac McDermott Miller Regional Economic Confidence quarterly report.

The December 2020 quarterly report was released on Friday and reveals that despite being one of the three most pessimistic regions in the country (along with Otago and Northland), more Southland householders had cast off September’s mantle of gloom and were feeling more confident about the future.

Northland has replaced Southland as the region feeling most down in the dumps. That district faces a restructuring of the Marsden Point refinery plant and the loss of about 90 jobs to the region.

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Westpac senior agri economist Nathan Penny said in Southland, a net 2% of respondents expected the region’s economy to improve over the year ahead.

[In Westpac's June quarterly report, a net 6% of respondents were pessimistic about the region's economy.]

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“The fact that the government has given the Tiwai Point aluminium smelter a reprieve may have contributed to the jump. 

“Agriculture sector strength, including Fonterra’s milk price forecast lift, is also likely to have helped confidence higher. 

“And like the rest of the country, the Southland housing market has heated up and is likely to continue to run hot at the start of 2021. 

“With tourists returning over the year as well, we anticipate that confidence will continue to head higher over the year ahead,” Mr Penny said. 

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Regions with large agriculture bases continued to be relatively more confident, he said. 

Gisborne/Hawke’s Bay, Nelson/Marlborough/ West Coast and Taranaki/Manawatu-Whanganui were standouts in this regard over the December quarter.

The survey asks households how confident they are about their region's economic prospects and was conducted between December 1-12.

The report also noted that regions more dependent on international tourism, such as Otago, have continued to struggle. Confidence in Auckland also remained low. 

It concludes the national bounce in confidence may reflect a general rebound in economic activity, including the surge in housing markets nationwide. 

On top of the local news, positive vaccine developments offshore have added to a feel-good factor, the Westpac report says.

Meanwhile Southland’s median house prices continued to reach new highs in November, according to Real Estate Institute of New Zealand’s monthly statistics, also released last week.

Southland’s median house price rose 23.6% from $320,000 in November last year to $395,500 this November, in keeping with a national trend. 

In total 11 New Zealand regions saw record median prices during November.

REINZ president Bindi Norwell said the new national median house price was $749,000.

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The prices showed how confident the market was and continued a rising but unsustainable trend since October 2011, she said. 

“Since October 2011, we’ve seen successive annual increases in median house prices (110 months in a row) and the last 5 months have been double-digit increases. This just isn’t sustainable and with data out earlier this week showing that home ownership is at its lowest level in 70 years, the gap between those that own and those that rent is just going to keep growing unless we can do something to start addressing the supply issue the country has,” Ms Norwell said.

“Hopefully we’ll hear more news from the Government in the coming months around their plans to reform the [Resource Management Act] and address some of the speed and cost issues developers and builders face when it comes to building residential property. 

“Unless we can build at scale and in an affordable manner, unaffordability is going to be something that remains a significant issue for Kiwis looking to get into the property market,” Ms Norwell said.