NZ may feel effect as migration tide turns
Kiwis heading back from a slowing Australian job market might add pressure to New Zealand's already tight housing market, according to a research note from Westpac.
The bank pointed to recent migration figures which showed that after 14 months of negative results, net migration had begun to turn slightly positive again.
Net migration for the three months to November was a net inflow of 1100 compared to a net outflow of 1400 a year earlier.
"In particular, the net outflow of New Zealanders to Australia has started to come off its peaks, although it remains very high," said Westpac senior economist Michael Gordon.
Since net migration had an influence on housing demand, and Kiwis' movements across the Tasman was the biggest factor in migration, the Australian economy was also being watched closely.
Job advertisements in Australia fell 16 per cent in the year to December, compared to New Zealand where they are growing about 5 per cent.
Although Australia's unemployment level was still lower than ours, Gordon said there was a "clear sense that the tide has turned" there.
However, he stressed migration's influence on the housing market paled in comparison with low mortgage rates, which were "far and away the biggest driver of the housing market at the moment".
Migration would only contribute about a fifth of the 8 per cent rise in house inflation Westpac is predicting for the next year.
The data also put paid to a perception that foreign migrants were behind Auckland's housing shortage, Gordon said.
"There's a perception that it's foreign arrivals, the cashed up foreigners buying houses, when really the swing factor is more in terms of what Kiwis are doing."
ASB economist Jane Turner said the turnaround in migration was "certainly something to watch" but its impact was likely to be low.
She said more migrants would be arriving for the Christchurch rebuild, and with much of the job market centred there or in Auckland, the pressure on housing supply in those two cities would intensify
"But what we'd also expect is a pick-up in construction over 2013. That should help alleviate pressures at the margin and we're talking about net migration picking up but still remaining at quite historically low levels."
ASB is forecasting an annual increase in net migration of 2000 to 3000 people this year, "but that compares to 20,000 per annum back in 2010", Turner said.
She expected house prices to continue rising, tempered by rising construction and low listings.