Migration boom has legs, says Westpac
A recent surge in migration is ‘‘unsustainable’’ but could continue at unusually high levels for years to come, Westpac economists warn.
In the year to August 31 net migration hit 60,000 for the first time, driven by more international students and Kiwis returning from across the Tasman as the Australian economy cools.
The figure means long term and permanent arrivals exceeded the number that left the country long term, the highest numbers on record.
With New Zealand’s economy also cooling, continued high levels of net migration are expected to see unemployment rise above 6 per cent.
BNZ said in September that it expects unemployment to climb to 6.8 per cent in 2017 and it was possible it could hit 7 per cent.
In 2014 most economists underestimated the highs migration would reach, but now there are forecasts that it could be years before it returns to the long term average, around 15,000 a year.
On Thursday Westpac said that eventually slowing migration could lead to a cooling in the Auckland housing market, as the population in the city would grow more slowly than expected, however this was a problem which was years away.
‘‘I do think it [net migration] looks unsustainably high but it could take a while for that to turn,’’ senior economist Felix Delbruck said, adding that it was possible that net migration may not have yet peaked.
Westpac said most of the current migration came from a change in patterns of Kiwis moving to Australia, with thousands pouring home as the Australian economy cools, and they are unable to access any welfare benefits.
In the last 12 months the number of Kiwis moving to Australia fell to 21,500, the lowest since 2003, while the number coming back reached 16,000, the highest on record, Westpac said.
In the last few months New Zealand has seen a small positive in net migration from Australia, the first time this had occurred since the early 1990s.
Delbruck was ‘‘surprised’’ by the change in trans-Tasman migration patterns.
‘‘It’s hard to pinpoint a special reason for this, and we suspect perceptions of economic prospects in Australia have simply soured to an unusual degree since the end of the mining boom.’’
Kiwis from most parts of New Zealand and across all ages were less willing to move to Australia, or more keen to come home.
‘‘And with about 600,000 New Zealanders currently living in Australia, the number of people returning home could stay high for quite a while yet,’’ Delbruck said.
While eventually Kiwis would start moving to Australia in increased numbers, the levels hit in 2011, when the Australian economy was in the middle of a mining boom, was ‘‘very unlikely’’.
Westpac sees unemployment reaching 6.5 per cent in 2016, partly driven by migration at a time when the economy was creating fewer new jobs.
‘‘If you’ve got slowing employment growth, which we do, we are in a slower economic environment now, and you combine that with rapid population growth, you get rising unemployment,’’ Delbruck said.