Highest October net migration since 2002 as less leave NZ (Update 2)

The trend of fewer people leaving New Zealand on a permanent or long term (PLT) basis continued in October with migration figures released by Statistics New Zealand showing a net 3,000 more people arrived in the country than left during the month. (Update 2 includes economist comment.) There were 3,816 PLT departures in October, down from 5,841 in October 2008 and the lowest departure levels since October 2002. PLT arrivals were also down on a year before. There were 6,820 arrivals over the month, from 7,328 a year ago. The strong population growth in recent months has many picking the Reserve Bank of New Zealand will have to hike the Official Cash Rate earlier than 'the second half of 2010' as house prices rise on the back of increased demand and a low level of listings during the 'spring selling season'. ASB economist Jane Turner said the pick-up in population growth has been fueling housing demand for the past six months as supply of houses to the market remains below average. "The demand for housing and pick-up in house prices threaten a return to an economy that is overly leveraged to housing debt, which will test the RBNZ's patience over the next 6 months," Turner said. "While the RBNZ remains adamant it will be on hold till the second half of 2010, we expect housing market pressures will prompt earlier action and expect the first OCR increase in April 2010," she said. In the year to October 2009, PLT migration was 18,560. This was up from 4,329 in the year to October 2008, but down from 37,470 and 39,314, respectively, in 2002 and 2003. Stats NZ said the increase in annual migration from 2008 was due to 14,900 fewer PLT departures in the year to October 2009 than the year before. In the last four months, there has been a net PLT inflow of more than 10,000 migrants to New Zealand. Seasonally adjusted figures show net PLT migration of 2,120 in October, up from 1,860 in September. Here are Stats NZ's comments on the figures:

The net PLT migration gain of 18,600 in the year ended October 2009 was higher than the annual average of 11,400 for the December years 1990"“2008. Net PLT migration varied substantially within this 19-year period. The net gain peaked at 30,200 in the April 1996 year and again at 42,500 in the May 2003 year. Net outflows were experienced during most of 1998"“2001, with the largest being a net loss of 13,200 people in the February 2001 year. Annual PLT migration by country In the year ended October 2009, there were net PLT inflows from the United Kingdom (9,200), India (5,900), China (3,600), the Philippines (2,600), Fiji (2,500), and Germany and South Africa (each 1,500). The net PLT outflow to Australia was 21,200 in the October 2009 year, compared with a net outflow of 34,600 in the October 2008 year. The annual net outflow to Australia has been decreasing since the record highs of 35,400 in the December 2008 and January 2009 years. The latest net outflow resulted from 35,600 PLT departures to Australia, partly offset by 14,400 PLT arrivals from Australia. Almost 9 in every 10 PLT departures to Australia were New Zealand citizens (31,200). Of the PLT arrivals from Australia, two-thirds were New Zealand citizens (9,600), similar to levels observed over the past decade. Annual PLT migration by citizenship A net inflow of 37,600 non-New Zealand citizens and a net outflow of 19,000 New Zealand citizens were recorded in the year ended October 2009. PLT arrivals of New Zealand citizens numbered 25,700 in the October 2009 year, above the average of 23,400 recorded for the 1979"“2008 December years, but below peaks in the March 1991 year (29,600) and the October 2003 year (27,800). Arrivals of New Zealand citizens tend to show relatively little variation year-to-year, and the variation that does occur often follows trends in departures of New Zealand citizens a few years earlier. PLT departures of New Zealand citizens have shown much more annual variation than arrivals of New Zealand citizens. The highest number of departures of New Zealand citizens was 64,300 in the October 1979 year, but by the January 1984 year, this had decreased to a low of 24,400. There were 44,700 PLT departures of New Zealand citizens in the October 2009 year, down 15,600 from the previous year. PLT arrivals of non-New Zealand citizens were less than 30,000 a year between 1979 and 1992, then doubled to reach a peak of 58,800 in the July 1996 year. Another peak of 72,800 was reached in the February 2003 year. The changes in arrivals of non-New Zealand citizens reflect changes in arrivals of temporary workers (including working holidaymakers) and overseas students staying for 12 months or more, as well as arrivals for residence. Although arrivals of non-New Zealand citizens have generally been increasing since 2005, the 61,000 arrivals in the October 2009 year were down 2,900 from the October 2008 year. PLT departures of non-New Zealand citizens have generally been increasing since 1984, corresponding with the general increase in arrivals of non-New Zealand citizens. There were 23,500 PLT departures of non-New Zealand citizens in the October 2009 year, up 800 from the October 2008 year. Annual PLT migration by permit type In the October 2009 year, 29,600 PLT arrivals were Australian or New Zealand citizens who did not require a permit to remain in New Zealand. Of the 57,100 PLT arrivals who did require a permit, 22,200 arrived on work permits, 15,900 arrived on student permits, 13,800 arrived on residence permits, and 4,700 arrived on visitor permits. Compared with the October 2008 year, there were more PLT arrivals on student permits (up 800), but fewer arrivals on work permits (down 1,500), and on residence permits (down 800). The majority of residence approvals in recent years have been granted onshore, to people who arrived on other permit types.

The pick-up in population growth has been fuelling demand for housing over the past 6 months. As departures remain low, the supply of housing available for sale has remained below average, creating very tight conditions in the housing market. Combined with low interest rates and a recovery in confidence, house prices have started to pick up substantially over the past few months. The demand for housing and pick-up in house prices threaten a return to an economy that is overly leveraged to housing debt, which will test the RBNZ's patience over the next 6 months. While the RBNZ remains adamant it will be on hold till the second half of 2010, we expect housing market pressures will prompt earlier action and expect the first OCR increase in April 2010.