News
Southland has retained its position as the strongest performing region in KiwiBank’s 2025 “Regional Divide” report, with Invercargill’s construction boom driving the local economy.
KiwiBank’s annual heat-map, released on 1 July, again awarded Southland a score of 5/10 — the highest in the country, matched only by neighbouring Otago.
“The further south you go the better the business climate seems,” said KiwiBank economist Troy Sutherland.
Building boom fuels growth
The report highlights Invercargill’s surge in dwelling consents and commercial projects, which is bucking the national trend of slowing construction.
“Fresh consents keep builders and suppliers busy, offsetting national softness,” economists Jarrod Kerr, Mary Jo Vergara and Sabrina Delgado noted.
The city’s CBD redevelopment and new subdivisions on the fringe are boosting demand for tradespeople and materials, with the momentum expected to continue.
Why the south is thriving
Economists attribute Southland’s success to three main factors:
- Construction momentum – strong pipelines for housing and commercial builds.
- Commodity resilience – solid dairy and meat prices, supported by a weaker kiwi dollar.
- Cost-of-living buffer – lower house prices ease mortgage pressure compared to main centres.
Add falling interest rates into the mix, and the report says the region is poised “for spring to turn into a warmer summer” for local businesses.
North–south divide widens
The South Island average score rose to 4.6, while the North Island lagged at 3.2. Northland, Gisborne and Taranaki fell further, and Wellington remains at a “Jack Frost” score of two.
For Invercargill, the numbers back up what locals see every day — cranes on the skyline, strong retail confidence and full order books for trades.
“We’re simply more upbeat, more active and more fun,” the authors wrote after visiting the deep south.
Outlook
KiwiBank expects rate cuts later in 2025 to support recovery nationwide. If Invercargill’s construction surge continues and Otago’s tourism remains strong, Southland is well-positioned to hold its top spot next year.
For now, the message is clear: head south for better economic weather.
Read the full Kiwibank report.
