The Government is downpaying suggestions its cuts to immigration numbers will have an impact on Auckland's housing market.

Immigration Minister Michael Woodhouse yesterday outlined changes to the residency programme, including a cut in overall numbers from 90,000-100,000 a year to 85,000-95,000 a year.

The cuts have won praise from the business sector who said increasing the number of points for skilled migrants will sharpen the annual intake towards higher skilled people.

Skilled migrants now need 160 "points" rather than 140 and numbers allowed in under the family category have been cut, including a temporary halt to applications from parents of adult migrants.


"It's positive that the government has taken on board some of the concerns of employers regarding the skill base of those achieving permanent residency status," said BusinessNZ chief executive Kirk Hope.

"The announcement is an encouraging sign of progress towards a migration system that benefits the workforce and New Zealand generally."

Woodhouse signalled further changes for those on temporary work visas, to be announced soon.

It comes after record net migration and months of pressure from opposition parties to cut migration to ease pressure on housing and infrastructure, especially in Auckland, while National has insisted immigration settings were fine.

June Ranson, the chair of the Association of Migration and Investment, said the changes would have a significant impact on skilled migrants hoping to settle in Auckland because they did not qualify for the 30 bonus points for settling in the regions. She said the new 160-point threshold meant it was now hard for anybody without qualifications to get in as well as tradespeople.

"This is seen as a move to take the pressure off the Auckland housing market."

Labour's housing spokesman Phil Twyford said it was a "mere tweaking" of current record high migration levels.

"In terms of the effect on the housing market, I would have thought on its own this will make very little difference. Given all the other factors like the effect of non-resident foreign buyers, the shortfall of 42,000 houses and very low interest rates, a mere tweaking of immigration levels is unlikely to make much difference."

Asked if the changes were because of the pressure on housing in Auckland, Prime Minister John Key said it was to address the "trajectory" of growing demand for residency.

"So we wouldn't want to overstate that. It's not a dramatic move, but it will have some impact."

Woodhouse was also reluctant to concede the pressure on Auckland's infrastructure from migration had influenced the decision to make the changes.

"I think that's a broader question." He said the main driver was ensuring New Zealand controlled migration numbers while continuing to attract the skilled workers it needed.

NZ First leader Winston Peters says the decision was a panicked reaction to the National Party's polling.

"The plain fact is that after years of denial, their polling is telling them the public are concerned," he said.

"National has dropped its bundle and panicked."

Official figures show 57,958 people were granted residency in the year ended June 30, up from 52,447 last year. The record levels have been partly driven by Kiwis coming home from Australia as the economy there has weakened.