An excess of immigrants over emigrants is pressuring New Zealand’s already-stressed housing sector. Many more people are arriving than leaving, so that the net immigrant inflow is likely to be 45,000 by year-end, according to Statistics New Zealand.
This could mean housing prices rising by up to 12% next year, experts estimate, noting that rents rose by 10% when a similar migration-fuelled boom occurred in 2013.
In April, net immigration increased by the second highest number on record, with 4,100 more people arriving than leaving New Zealand. The main reason? Fewer people are leaving for Australia, owing to a slowdown in Australia’s economy. Australia’s mining sector is cooling after a long boom. Besides, New Zealand now offers better opportunities in sectors like construction. Finally, New Zealanders are not entitled to unemployment benefits in Australia, so moving entails risks.
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Reacting to growing concerns over migration, the Reserve Bank of New Zealand recently said the issue will be taken into consideration when it decides how far and fast to push up interest rates.
The government, however, has downplayed fears. In its recent budget the government removed import tariffs and duty on building materials to ease housing demand.
Finance Minister Bill English noted that the increased migration inflow was not because people were moving to New Zealand, but because more “Kiwis are staying home”.
"It’s been a fairly sharp swing quite recently. I think you would need to see whether it’s going to last for some time or be some kind of permanent shift…In any case you can’t make that much of a shift through migration numbers. You can make quite a lot of difference by simply allowing a lot more houses to get started," said the minister.
This article was republished with permission from Global Property Guide.