Migration resilience means no demand let-up

Wednesday 28 February 2018

An increase in January’s migration flow suggests there is no end in sight for population growth driven housing demand pressures.

By Miriam Bell

New data from Statistics NZ shows there was an annual net gain of 70,100 migrants in the year ending January 2018.

This was down by 1,200 on the year ending January 2017, but it was up on the annual net gain of 70,000 migrants recorded in December.

Further, the number of migrants who arrived in January increased to 6,200 from 5,700 in December. It was the second month in a row to record an increase in migrant arrivals.

It is this development which has left economists wondering what the migration trajectory might be in coming months.

Annual net migration was thought to have peaked after reaching a record high of 72,400 in the July 2017 year – although the inflow remains high.

Now ASB senior economist Mark Smith says that Statistics NZ data in recent months points to a strengthening in net permanent and long-term immigration at historically-high levels.

They still expect net inflows to moderate, as the synchronised global upswing and tight Australian labour market trigger a moderation in arrival numbers and a pick-up in departures, he says.

“However, risks are tilted towards the tailing off in net immigration being later and less pronounced than what we had previously expected.

“This is providing considerable support to New Zealand’s economy, but also adding to capacity pressures.”

For Westpac senior economist Satish Ranchhod, the strong rise in monthly net migration in January. means it is now similar to the fast pace seen through mid-2016.

Importantly, the easing off in annual migration that was seen in recent months has now been arrested, he says.

“The key question is whether we will see net migration resuming its downtrend over the coming months, with the big uncertainty being new arrivals.”

Ranchhod says it wouldn’t be surprising to see some pull back in arrivals next month as they are seeing firmer conditions in other countries, which will make New Zealand look less attractive.

“However, while off its highs, net migration is still showing a great deal of resilience. Consequently, even though we expect a continued easing off over the next few years, this may be quite gradual.”

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