No let-up in migration pressure on housing

New Zealand’s unadjusted annual net gain of migrants reached a new high of 69,100 in the June 2016 year, according to the latest Statistics New Zealand migration data.

Population statistics manager Jo-Anne Skinner said it is the 23rd month in a row that the annual net gain in migrants has set a new record.

The seasonally adjusted monthly figures showed a net gain of 5,700 migrants in June 2016.

This was up on the 5,500 net gain of migrants seen in both May and April.

Since reaching a peak of 6,200 in November 2015, the seasonally adjusted net gain in migrants has averaged 5,700 a month.

Skinner said that while the monthly net gain of migrants is still positive, and remains high relative to historic levels, recent net gains show a declining trend.

Migration has been at the forefront of much recent discussion on New Zealand’s heated housing market.

ASB economist Daniel Snowdon said the migration boom has placed strain on New Zealand’s already-tight housing market, which is a point made by the Reserve Bank several times recently.

Today’s data showed that net migration is continuing to run at record levels, but provides some further evidence migration inflows could be close to peaking, he said.

“Despite the annual measure ticking higher, monthly net inflow remains below the 6,000+ levels seen just a few months ago, suggesting the annual metric will soon start to slow, albeit gradually.

“We expect inflows from Australia to slow as the Australian labour market continues its recovery.  However, some of that slack is being taken up by students from China and India (a significant and growing number of which are choosing to stay).”

Westpac senior economist Anne Boniface said the data was a smidgeon stronger than the last couple of months, but still indicated that monthly net migration has passed the peak.

Further, annual net migration is likely to have peaked in June, at around 69,000, and Westpac forecasts annual net migration to decline from here, she said.

“There has been a gradual slowing in arrivals of non-New Zealanders over the last year, which continued this month, while departures of New Zealanders ticked higher in June.

“We expect annual net migration to fall over the coming years, as foreigners who arrived on temporary work or student visas over the past three years begin to depart, and as the recovering Australian labour market begins to attract New Zealanders across the Tasman.”

Despite this, annual net migration will remain at historically elevated levels for some time yet, Boniface said.

This means migration levels are unlikely to stop contributing to the demand-side pressures on the housing market, particularly in Auckland, in the foreseeable future.