‘Flood of returning Kiwis’ is amyth, economists say

The idea that a ‘‘flood of New Zealanders’’ are coming back to New Zealand is a myth, economists say, and that could have significant implications for the year ahead.

Westpac chief economist Dominick Stephens said suggestions that this country’s Covid-19 strategy had drawn people home in large numbers were incorrect.

‘‘Last year, the average number of New Zealanders entering the country on a permanent and longterm basis was 3400 amonth.

‘‘Since April this year it has been 1000. In other words, the facts are the number of Kiwis coming into New Zealand has dropped by more than two-thirds.’’

A correspondingly low number leaving the country had brought net migration to zero since April, he said, compared with an average net gain of 5000 amonth through 2019.

Between April and July only 800 New Zealand citizens left the country. That ‘‘huge drop’’ in the rate of population growth had important implications, Stephens said. The construction sector would need to build less than previously thought and Westpac was expecting a 10 per cent drop in construction activity between now and next year.

Stephens said rents would also risemore slowly, although low interest rates would still mean house prices would rise rapidly next year.

‘‘Low migration and low population growth will make it tougher for businesses to access skilled and unskilled labour. ‘‘That is bad for business but good for lower-skilled New Zealanders. It will shrink the pie but increase the slice of the pie going to the most vulnerable.’’

At the higher-skilled end of the market, New Zealanders might not be moving overseas to take the best jobs they could, and employers trying to recruit for highly specialised positions would have to restrict their job search to New Zealand, Stephens said.

Infometrics chief forecaster Gareth Kiernan agreed the drop in migration could constrain growth in some sectors. Horticulture was an example of an industry that was suffering because it could not lean on foreign workers.

But he said the drop in migration would help the housing supply issue.