Immigration pick up a plus for housing market

Friday 22 May 2009

A rapid pick up in immigration numbers is being seen by many economists as a factor which will provide support to New Zealand’s housing market.

Figures from Statistics New Zealand yesterday showed that net migration continues to recover on the back of another sizable drop in departures.

They show that over the past 12 months New Zealand has recorded an additional 9,176 net migrants.

"The turn around in net migration over the past few months has been swift, and net migration is likely to continue to rise,” ASB Bank economist Jane Turner says.

At the current rate the annualised inflow equates to around 26,000 people coming into the country a year.

Turner predicts that overall annual net migration is likely to peak at around 20,000 towards the end of this year. While it is higher than previous years it is a fairly modest rise compared to previous net-migration cycles.

“The boost to the population will help provide some timely support for the retail and housing activity, helping to curb the recent fall in demand.”

BNZ chief economist Tony Alexander says the equation for the housing market of booming migration is very simple. Currently population growth is accelerating, at a time when there is an existing housing shortage, and a shortage likely to get worse due to the weakest construction in half a century. Those factors plus having borrowing costs near record lows equals support for the housing market.

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