Updated immigration data reveals NZ needs to build fewer homes, says economist

New Zealand’s immigration boom wasn’t as big as reported at the time, a major revision by Statistics NZ has found.

That means we’ll need to build fewer houses to meet the current shortage, says Westpac senior economist Satish Ranchhod.

The new, more accurate, data shows there are fewer people in New Zealand than we thought and that has major implications for the economic outlook, he says.

Net migration peaked at 64,000 in mid-2016, not 72,500, in 2017, according to revised figures. It is now tracking at 43,000 — about 20,000 fewer migrants a year than previously thought.

Far from being an arcane revision of methodology, the new migration figures change the outlook for GDP growth, employment and housing, Ranchhod says.

Stats NZ has revised the figures based on new research about how many of our new long-term arrivals actually stay in the country.

The previous data was based on the intended length of stay, as recorded on immigration forms, by long-term migrants when they arrived at the border.

But it turns out more migrants than we thought decided not to stick around. That’s particularly true for those in the 20-29 age bracket, which includes a large proportion of international students.

While tracking the actual movements of new arrivals is more complex than intentions, Stats NZ now has a system which gives much more accurate data.

The change is related to technology which means we no longer have to fill out the arrival and departure cards when we travel.

The lower number has important implications for the economy, says Ranchhod.

“It reinforces our expectations for a cooling in GDP growth and the housing market over the next few years,” he says.

Population figures are due later this month which will be lower than previous estimates.

Ranchhod estimates the rate of population growth hit two per cent in 2016 and has slowed to 1.5 per cent.

“That will be important for many businesses, meaning that an ‘easy’ source of demand growth that they’ve enjoyed in recent years is dissipating even faster than expected,” Ranchhod says.

It should also mean fewer houses are required to be built to deal with the current shortage.

The trends will be particularly important for Auckland, which has experienced an especially large population cycle. However, their impact will be felt more widely, he says.