Migrant data shows risk of housing bust – bank

Westpac says the construction industry in Auckland may be heading for a ‘‘boom-bust’’ cycle after Stats NZ revised down its estimate of how many migrants had moved to New Zealand.

Net migration in the year to May 2019 was 46,100, and not 55,500 as previously reported, Stats NZ said.

The department lowered its migration estimate after improving the way it linked arrivals and departures.

Net migration has been running at a historically high level above 40,000 a year since late 2014, Stats NZ population indicators manager Tehseen Islam said.

But the revision means annual net migration was about 20,000 down on the peak it reached of 63,900 in the year to July 2016.

Stats NZ’s latest provisional estimate is that net migration slipped further to 41,500 in the year to November 2019, but it said that figure was subject to greater uncertainty than the May figure, and could be out by 1600.

Westpac analyst Satish Ranchhod said the bank had made some allowance for net migration slowing faster than previous estimates had implied, but the updated numbers were ‘‘even softer than we expected’’.

‘‘Earlier estimates implied that net migration was running at an annual pace of around 55,000. We now know it’s trended down to just above 40,000.’’

He expected a further decline over the year ahead. That would have a range of implications for the economy, he said.

‘‘While a large number of houses will still be needed to address earlier underbuilding, we think a peak in home building is approaching. Indeed, there is a real risk of a boom-bust cycle in Auckland, given how much population growth has slowed and construction has increased.’’

Slower population growth would also affect the retail sector, he said, given many businesses were sourcing skilled labour from abroad.