Record NZ migration keeps heat on housing

Record NZ migration keeps heat on housing

Record NZ migration keeps heat on housing

The migration boom continued in January with a gain of 5500 people, a new monthly peak, continuing to help stoke demand for housing. A slowdown in migrant numbers in December may have just been a "blip" economists said.

March 2, 2015 The gain in the year to the end of January hit a new record high of 53,800, more than double a year earlier. More migrants are coming in, especially on work visas, and fewer New Zealanders are leaving for Australia.

Arrivals outnumber those leaving New Zealand by two to one, reflecting the strong job economy here, especially compared with Australia, ANZ economists said.

The annual migration gain was expected to hit a new peak of 60,000 by the middle of the year, ANZ said, 50 per cent higher than the previous peak more than a decade ago.

New Zealand's stronger job market was continuing to attract foreign workers in large numbers, Westpac Bank economists said.

The migration boom was expected to keep rising towards 60,000 a year, before tailing off a little.

The strong population gain would boost shop sales and demand for housing, Westpac said, but the Reserve Bank would still keep official interest rates on hold.

ANZ economists said annual migration would keep hitting new highs in the months ahead and do nothing to "allay" Reserve Bank concerns about the Auckland housing market.

The migration figures are seasonally adjusted, and rose in January after slipping back in the two months before.

The net gain in January reflected more non-New Zealanders arriving in the country.

There was a net gain of 4100 in December, and a previous record gain of almost 51,000 for calendar 2014.

Some economists said the December figures suggested a peak may have been past, but January figures have come back strongly.

The December figures were down from an earlier monthly peak of 5200 in October as fewer foreigners came to New Zealand, especially on student visas.

Westpac Bank economists said the dip in December "seems to have been an aberration".

The rebound in January seems to have been mainly in arrivals on temporary work visas, which Westpac said had risen to "new highs".

Student visa arrivals rebounded modestly but were still down on levels seen late last year.

At the same time, departures by New Zealanders to Australia were still near historically low levels.

Strong migration is seen as a factor in reigniting the housing market, especially in Auckland. The property market has bounced back after the uncertainty before last year's election and has also been given a boost as fixed mortgage rates fell in recent weeks.

The big lift in net migration has been driven by both more people arriving and fewer leaving New Zealand, especially for Australia as the job market worsened across the Tasman.

More people want to come to New Zealand because of a strong job market compared with the rest of the world and there has been a rush of students, especially from India, in part because of the relatively safety of New Zealand.

The Reserve Bank is expecting migration to peak early this year, and bank economists have been expecting the migration boom to start leveling off.

With continued low inflation, some economists believe the central bank cannot justify raising official interest rates, even with rapidly rising house prices in Auckland and Canterbury.

Strong migration is also adding to the supply of workers and keeping a lid on wage rises.

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