Migration has boomed to a ten-year high, and economists are warning that stronger than expected migration, perhaps 40,000 by the end of the year, could reignite the housing market.
For the month of February, there were 3500 more migrant arrivals than departures, the highest in a decade, according to Statistics NZ figures out yesterday.
The annual net gain was more than 29,000, but at recent monthly rates, that could head towards 38,000 or even 40,000 - close to record levels seen a decade ago.
As fewer New Zealanders leave for Australia and more foreigners arrive here, the trend in migration has been rising since late 2012.
More migrants are arriving from China than from Britain for the first time in a decade.
The latest net gain was the highest since the 30,100 annual gain in the year to February 2004.
The boom in migration in the early 2000s was a factor in rapidly rising house prices during the period.
If the rate of migration in the past three months continued for a full year, the net gain would be about 38,000, close to the peak of the migration boom in 2003. That would be equal to a 0.8 per cent population increase, even before any natural increase, Deutsche Bank economists said.
"Stronger than expected migrant flows risk reigniting the housing market and thus remain a key source of upside risk to the Reserve Bank's growth and domestic inflation forecasts," Deutsche Bank said.
ANZ Bank economists said the relative strength of the New Zealand economy was a magnet for inward migration.
On the current trajectory, the net inflow of migrants was on track to approach 40,000 by the end of the year, ANZ said. That would boost consumer spending and the housing market. But it would also lift the supply of labour.
The Reserve Bank last week lifted the official cash rate to rein in inflation and it is expected to rise by 100 basis points this year and as much again next year.
The rise is expected to take some heat out of the property market.
Infometrics economists said the number of people leaving New Zealand was weak, but it was the strength in the arrival of foreigners that confounded expectations.
Departures to Australia were expected to stay low and arrivals to stay up in coming months.
Westpac Bank economists said at the present monthly rate, it would take only a few more months for annual net immigration to exceed its forecast peak of 33,000.
A drop in departures to Australia was the main factor in the upsurge in net immigration.
"Given the current unusual divergence between Australia's and New Zealand job markets, trans-Tasman departures are likely to remain low for now, though there are early signs that Australian job growth may be picking up again," Westpac said.