A much better job market in New Zealand because of the vast Canterbury rebuild and more Asians coming to study here has rocketed the migration boom close to the record peaks of a decade ago, and it could go even higher.
The migration explosion reflects a rising number of people from India and China coming to study and far fewer Kiwis leaving for Australia as the job market across the Tasman slumps to its worst level in a decade.
The annual net migration gain topped 41,000 people in the July year and economists think it may peak at about 50,000 in coming months.
Some believe that risks reigniting the housing market, but most still think the Reserve Bank will hold off raising the official cash rate again till early next year. "New Zealand has become increasingly attractive to both residents and foreigners in search of work," Infometrics said.
There was a "vast" amount of rebuilding work to be done in Canterbury and New Zealand's economic growth was improving relative to Australia.
Unemployment in New Zealand is now down to 5.6 per cent. The unemployment rate in Australia has blown out to 6.4 per cent, according to July figures, the worst job market for a decade.
Most new migrants tend to stay in Auckland, but Canterbury has also seen a huge boost in arrivals, up more than 5500 in the past year, while the Wellington region had fewer than 900 new migrants.
Not everyone is coming to work in New Zealand, with student visas up 4800 in the past July year.
At the same time, the numbers of New Zealanders leaving for Australia are down to levels last seen more than a decade ago.
Arrivals of Australians were at the highest levels for decades, Westpac Bank economists said.
And Australian job prospects were not expected to improve much before early next year, so the trend could continue for a while."We expect net immigration to peak around 50,000 early next year," Westpac said.
With recent falls in fixed term mortgage rates, the migration boom may support a revival in the housing market in the next year.
That was likely to be temporary, as the Australian job market would likely bounce back and interest rates in New Zealand continue to rise next year.
But Deutsche Bank chief economist Darren Gibbs said the stronger than expected migrant numbers risked "reigniting the housing market".
The present level of migration was already stronger than the Reserve Bank expected in June, and may be even higher than the "alternative scenario" which the Reserve Bank suggested could see the OCR rise an extra 50 basis points. But strong migration was providing some offset to the recent slump in dairy and log prices.
Gibbs said the Reserve Bank would have been pleasantly surprised there had been no spillover from strong migration into house prices, "to date".
That may be because many migrants were not staying for good, such as students, and so would rent rather than buy homes.
Bank of New Zealand chief economist Tony Alexander agreed that net migration was likely to hit 50,000 by the end of the year.
The strong turnaround from two years ago mainly reflects the net loss to Australia declining from almost 40,000 to now just 7303, and it could even turn slightly positive in New Zealand's favour for the first time since 1991.
- The Dominion Post