Kiwifruit country leads as North Island recovers and storm clouds gather
Bay of Plenty has claimed the top spot in ASB's Q1 2026 Regional Economic Scoreboard, ending Canterbury's six-month run at number one, as New Zealand's regional economy shows signs of broadening recovery — but with significant risks looming from the Middle East conflict.
The scoreboard ranks all 16 Regional Council areas across employment, construction, retail trade, house prices, and consumer confidence. Bay of Plenty's ascent was driven by the strongest employment growth in the country, driven by a bumper 2025 kiwifruit season. Construction demand surged 51.4% annually and new car registrations rose 14.4% — both well above the national average.
"After a bumper 2025 kiwifruit season and a strong start to 2026, the Bay of Plenty has reclaimed the top spot. Strong export demand and solid employment growth are underpinning the region's momentum," said ASB chief economist Nick Tuffley.
Canterbury held second place, supported by dairy prices, population growth, tourism, and ongoing investment — posting 3.4% annual house price growth and an unemployment rate of just 4.4%, well below the national rate of 5.7%. Otago rounded out the top three on the strength of retail sales growth of 12.4% annually, the strongest of any region, driven by tourism and household spending.
North Island improving — except Wellington
Auckland dropped one place to fifth, weighed down by a weak labour market — employment fell 0.9% annually — and house prices that declined 1.7% year-on-year against a national average decline of just 0.2%. Despite those headwinds, retail sales and house sales both outpaced the national average, supported by lower interest rates and stronger tourism arrivals.
The broader North Island picture was more encouraging, with five of eight regions placing in the top half of the scoreboard for the first time in several quarters.
"The regional story this quarter is one of a more balanced recovery," Tuffley said. "We're seeing broader improvement across the North Island, with most regions now sitting in the top half of the rankings."
Wellington rose two places to 13th, leaving the bottom of the scoreboard — but the report is cautious about durability. House prices fell 2.6% annually, the weakest of any major centre, and construction spending collapsed 32.4%. The report notes that ongoing infrastructure shortfalls and public sector uncertainty continue to weigh on consumer confidence and discretionary spending — and the national economic backdrop adds a further layer of caution.
Storm clouds on the horizon
The Q1 data largely predates the full economic impact of the Middle East conflict. ASB expects annual CPI inflation to spend much of 2026 well above 4%, with the RBNZ forecast to begin monetary policy normalisation in July and the OCR reaching 3.25% by year end.
"With inflation expected to remain above the RBNZ's target for much of 2026 and cost pressures building, the pace of the recovery is likely to remain uneven across regions," Tuffley said.
Regional resilience is showing up in housing values. QV data from May 2026 shows Bay of Plenty values rose 0.9% over the first quarter, while Southland posted a 2.5% quarterly gain and Invercargill values rose 9.5% over the year — all outperforming a largely flat national picture.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
