Auckland jobless rate tops nation while Otago nears full employment
New Zealand’s recovery is gaining momentum and spreading across sectors, but remains uneven across the map, according to BNZ chief economist Mike Jones (pictured).
The regional divergence is unfolding against a backdrop of a 2.25% official cash rate and fixed mortgage rates edging off their recent lows, with the Reserve Bank signalling the next move in rates is likely up but not imminent.
Jones argues that “some convergence in regional economic performance is likely this year,” noting that “a sustained recovery would be difficult without it.” Lower interest rates and a slow turn in migration are expected to support housing, construction, retail, and services, “thus allowing the cities to play a bit of catch-up.”
So far, though, the South Island is still in the box seat.
“The ongoing outperformance of the South – Otago and Canterbury in particular, but also Southland – continues to leap off the page,” Jones said, citing strong people flows, tourism, and resilient commodity export prices as “powerful supports.”
Housing and rents: tale of two islands persists
The clearest divergence is in housing. Since the national house price correction ended in April 2023, prices have fallen a further 1.4% in Auckland and 3.2% in Wellington, while Canterbury, Otago and Southland have jumped 7%, 10% and 20% respectively.
Jones notes the “tale of two islands” in both prices and rents. Wellington’s ample stock has seen new tenancy rents fall 7% over the past year, while Auckland rents have settled around 4% below their 2024 peak. The strongest rental inflation has been in Otago, Bay of Plenty, and Canterbury – signalling tighter conditions for tenants and potential yield support for investors.
Construction and labour market show early convergence
On the supply side, the four-year, 26% peak‑to‑trough slide in residential construction has bottomed out, with consents lifting in Canterbury, Otago, Wellington and Auckland. Wellington’s 18% rise in 2025 looks like catch‑up, while Bay of Plenty’s 13% decline in consents risks renewed housing tightness.
Jobs data also point to a more balanced upswing. Most regions added employment in Q4, with Wellington recording the largest annual increase, followed by Waikato, Bay of Plenty, and Canterbury. Yet labour market conditions still vary sharply.
“Auckland continues to experience the highest unemployment rate in the country at 6.6%… Otago has the lowest at 2.4%,” Jones said.
For the full BNZ analysis, follow this link.
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