Kiwis Cool on Aussie Boom
New Zealanders have long been drawn to Australia's stronger economy and higher GDP per person. However, economists say this trend may be reversing due to changes in both countries' economies.
Australia has traditionally had a more affluent economy than New Zealand, with its GDP per person starting to diverge from New Zealand's in the 1970s. Shamubeel Eaqub, chief economist at Simplicity, said this is partly due to Australia's better terms of trade and commodity prices.
In recent years, however, New Zealand has made progress in addressing its housing affordability issues, with house prices relative to GDP per person and rents relative to GDP starting to converge. Eaqub noted that while Australia's economy still starts from a stronger position, the current slowdown in the Australian housing market could change the picture.
BNZ chief economist Mike Jones agreed that New Zealand is gaining ground on Australia, citing signs of economic relativities tilting in favor of New Zealand. He added that while New Zealand is catching up, it's still not overtaking Australia in terms of overall economic performance.