Migration dips but housing pressure remains

Annual net migration remains at record levels with 71,885 migrants arriving in the country in the April 2017 year, according to the latest Statistics New Zealand data.

This is fractionally down from last month’s record high of 71,900 but is still the second highest net gain on record.

However, the data does also indicate a slight easing in the migration flow.

Once seasonally adjusted, there was a monthly net gain of 5,800 migrants in April, as compared to 6,100 in March. This was well down on 6,500 in January.

Westpac senior economist Satish Ranchhod said the migration flow may have eased in April, but it is still at a very high level.

The April pullback was mainly due to an increase in New Zealanders leaving the country, but it follows soft outflows last month and looks like a return to trend, he said.

“The net outflow of New Zealanders remains very low, accounting for around half of the pickup in net migration since 2012.

“But one area that’s worth watching more closely is the number of New Zealand citizens returning from offshore, which has been softening since January.”

Ranchhod said that net migration will remain firm for some time yet.

But he expects it to gradually ease off over the coming years as the global economy improves and more New Zealanders start to look at moving offshore.

“Nevertheless, the eventual easing in migration looks like it will be quite gradual. New Zealand’s economic conditions remain relatively positive.

“In addition, recent policy changes in Australia – including levies on international workers and higher charges for tertiary education - are likely to encourage more New Zealanders to stay onshore.”

ASB economists also noted that net migration continues to run close to record annual highs, although there was a pick-up in departures. 

Net migration flows will continue to support overall economic growth, even though the flow is likely to soften over time, they said.

Ongoing strength in migration flows mean there will be no let-up in housing demand pressure, particularly in Auckland which is where the majority of new migrants head.

To further confuse the mix, large scale house building programmes, like the government’s newly announced Crown Building Project and the Labour Party’s Kiwibuild policy, will need increased construction industry capacity.

The only solution to the capacity issue will be to bring in more tradespeople and that means keeping up the immigration flow, according to Property Institute chief executive Ashley Church.

This, in turn, will put further pressure on housing demand, in the short term at least, he said.

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