Brian Fallow

The Economics Editor of the NZ Herald

Kiwis quitting Australia fuel immigration surge

The strong immigration figures risk reigniting the housing market, says an economist.
The strong immigration figures risk reigniting the housing market, says an economist.

The immigration surge continued to gather pace last month, with the net inflow of 4270 people the second-largest monthly gain on record.

The rising trend has been driven by fewer New Zealanders leaving for Australia and more returning. The net loss of people to Australia last month would have fitted in a single airport bus - just 20, seasonally adjusted, compared with a net loss of 1550 in June last year.

Video


In the year ended June, 100,800 permanent and long-term migrants arrived. That includes 28,000 New Zealand citizens who had been overseas for more than a year.

Read also:
Experts tip lift in OCR
NZ dollar steady as OCR decision looms
Pressure building on NZ dollar

Departures were 62,400 (40,000 of them New Zealanders) making a net gain of 38,400, up from 7900 the year before. It is the highest net migration gain since the October 2003 year and compares with a 20-year average of 11,700.

ASB economist Chris Tennent-Brown expected net inflows to slow over the rest of this year, in light of the improvement in Australian labour market indicators.

"We expect annual net migration will peak around 42,500," Tennent-Brown said. "But at the moment the risk to this forecast is to the upside."

Deutsche Bank chief economist Darren Gibbs said the stronger-than-expected migrant flows risked reigniting the housing market and were a key source of upside risk to the Reserve Bank's growth and domestic inflation forecasts.

The bank's June policy statement sketched an alternative scenario where the annual net inflow of working-age migrants peaks at 45,000 or 8000 more than in the bank's scenario requiring, all else being equal, interest rates half a percentage point higher than they would otherwise be.

"In principle [that] provides some offset to recent bad news as regards global dairy prices," Gibbs said. "That said, we think that the Reserve Bank will have been pleasantly surprised at the lack of spillover from recent migrant inflows into the performance of the housing market.

"It could be that the composition of foreign migrant arrivals - heavily focused on visas that suggest a long-term visit, not necessarily a permanent arrival - means that pressures on the owner-occupier housing market, as opposed to the rental market, are less than total migrant inflows might suggest."

See more on the immigration stats here:

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a1 at 15 Sep 2014 16:33:28 Processing Time: 991ms