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Highest October net migration since 2002 as less leave NZ (Update 2)
November 23rd, 2009The 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.
Here is ASB economist Jane Turner’s take on the figures:
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.
Tags: migration, statistics new zealand
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November 23rd, 2009 at 12:07 pm
So incoming arrivals are down on a year ago, but the numbers are up overall because less of us are leaving. Interesting.
November 23rd, 2009 at 12:20 pm
So what does this all mean? Fewer people arriving; fewer leaving, but greater demand from house buyers with little savings taking on more debt fueled by more offshore borrowing to spend on sub-standard housing.
On the whole, it sounds like business as usual.
November 23rd, 2009 at 1:01 pm
It means a lot to this country J.C. you just need to think about it in a positive way.
The house prices amy be pushed up, but it is still much better then we all rent from Australia owners.
November 23rd, 2009 at 1:14 pm
Absolute cwap(TM)
um….this maybe counter-intuitive….ppl leave for better….they might indeed be staying but are broke, so wont be unduly pressurising the housing market….I would also assume that if they want to leave they are determined to do so, will rent until they can…..
I notice ASB etc talking up the market again….it must be one of their better performing and safer risks….so hardly un-expected. Hard to believe that ppl get paid to make such statements…..and the rabid right complain about Govn employees….
regards
November 23rd, 2009 at 1:20 pm
I’d be interested to know how much of this population growth is coming from “20-somethings” who are unemployed and cannot afford to do the usual OE. There must be a few of them – I believe that unemployment for that demographic is a lot worse than the average number.
November 23rd, 2009 at 1:43 pm
“It means a lot to this country J.C. you just need to think about it in a positive way.
The house prices amy be pushed up, but it is still much better then we all rent from Australia owners.”
Well, you could argue that we’re “renting” our mortgages from the Aussie-owned banks anyway, so the Aussies win regardless of whether or not NZers head across the ditch.
Where aren’t young people ditching the OE idea and heading over to China for intensive language training instead? I would think that would be a more productive use of their time than wasting away in a U.K. office.
November 23rd, 2009 at 2:29 pm
No matter the figures, the result is an increase in house prices. Didnt you get the memo? 10% pa over 10 years guaranteed. Look at me, im so smart.
*my ‘20 somethings’ mates as follows:
- trained lawyer: packing fruit.
- civil engineer: nightclub bouncer.
- journalist: bar tender.
- accountant: trademe scam artist.
- biochemist: returning to uni to fail but collect income support.
The OE is a way off when you earn NZ$15 an hour.
November 23rd, 2009 at 2:41 pm
The term is ‘transient’. They will leave as quickly as they came and those who stopped to collect the dole will go as well. I expect pop numbers to reverse in 2010 as the recession starts to bite into the flesh. There are no new jobs other than at WINZ and there is rising unemployment to boot. Key will be forced to put time limits on dole payments. So many weeks then bugger off. The Treasury report is a shocker. Luke can have his 10% pa dreams. I’ll stick with the 105% so far on copper/gold shares since March 6.
November 23rd, 2009 at 2:49 pm
Ah Wally, I think your sarcasm detector is malfunctioning.
So, when will your commodity bubble burst? Surely you wont be on the losing side… must keep you up at night.
November 23rd, 2009 at 2:53 pm
Yep…I been slow today…
November 23rd, 2009 at 3:06 pm
me golds up to $1162 USD today.
Tell everyone to stop buying it please. I can’t add to it at that price!!
November 23rd, 2009 at 3:18 pm
I met a friend who had just recently upgraded to a $640K home. His first home was bought at $200K about 10 years ago. about 6 months ago, they sold it at an auction for $530K. He told me that from his observations, whenever the economy is bad, the government would open up immigration. So he has no worries at all.
November 23rd, 2009 at 3:42 pm
it’s impossible for net migration to lead to increased numbers of house buyers if employment is decreasing unless they are gving ninja loans to the unemployed. PLT migration data has to be veiwed in light of the household labour force survey that shows employment decreased by 17,000 and unemployed increased by 12,000 in the last 3 months which means increased migration is not creating any jobs its only increasing the number of unemployed which is a burden to our economy not a boost.
http://stats.co.nz/browse_for_stats/work_income_and_spending/Employment/HouseholdLabourForceSurvey_HOTPSep09qtr.aspx
Also in the stats technical notes its says: “If a person’s intentions change later during the trip, this passenger type may no longer be correct. For example, a person may come to New Zealand with the declared intention of settling permanently (PLT migrant), but in fact may return overseas after a few months (overseas visitor)”
http://stats.co.nz/browse_for_stats/population/Migration/InternationalTravelAndMigration_HOTPOct09/Technical%20Notes.aspx
Bank economists need to take a closer look at the stats. Population estimates (based on net migration and births-deaths) and compare them with actual census counts from 1996 to 2001 they over estimated by 29,500 which was made up from a supposed migration gain over that period of 21500 but based on actual census counts the true migration over that period was actualy -8000 because birth and death numbers are normally accurate unlike migration figures which are proven to be totally unreliable. I believe this will especially be so this year considering employment figures.
The sole reason house prices have recovered in the last few months is because buyers can borrow 25% more due to interest rates falling 3% since mid 2008. It has nothing to do with net migration or a supposed housing shortage and everything to do with access to cheaper credit which won’t last forever.
November 23rd, 2009 at 3:43 pm
@William.
Therefore, your friend now has $90k more debt than 10 years ago. Sure, he was very well off “about 6 months ago” when he sold up and banked $320k of cash. But now he is back to where he started (with an extra $90k of debt). Additionally, how much of a housing upgrade has he made in real terms? His second home, 10 years ago, would of only been worth $230k or less… so in reality, he is basically as well off as before! Unless he cash’s in his chips.
November 23rd, 2009 at 3:55 pm
@ Kieran. Agree completely. Try explaining that to those down at the pub though!
November 23rd, 2009 at 4:01 pm
At least @William friend is enjoying having his own home – bxgger the loan, mortgages. I’ve been to some European countries, meet the locals there and most are living in rental accomodation in all their lives – their ultimate dream is to have their own homes so that they can pass it onto their kids. Let him enjoying his own home for Pete’s sakes. Like me I am looking at buying – sick of renting!
November 23rd, 2009 at 5:25 pm
We came to NZ from the UK about five years ago, had a nice house built and took a small mortgage. All our income – mainly pensions – comes from the UK and has to be converted at the present inflated exchange rate resulting in an effective income cut of 25-30%. Further, the UK Government froze out State Pensions at the point when we first left the UK. We cannot therefore afford to live here much longer, particularly taking into account future increases in the OCR and resulting further appreciation of the NZ Dollar. Very reluctantly we shall soon be forced to sell up, leave our children (adult) and grandchildren and go back home. At least we should get a good deal converting our Kiwi dollars back to Sterling!
Many Poms who retired to Spain have already returned to the UK in similar circumstance because the Pound has also depreciated badly against the Euro. I guess we will not be the only ones baling out from NZ. This should help to get the net migration figures down.
The laws of unintended consequences at work?
November 23rd, 2009 at 5:34 pm
Kieran – more string to your bow.
A dose of cool research and logic is a good counterbalance to the posters who see only their ‘wish list’, or think the easy-credit induced overpricing of latter years will last forever.
I feel sad for the young families (especially) who are currently, and will into the future pay a heavy price for the folly of those who allowed irresponsible credit growth to fan the flames.
Those who recognise history will realise the in-evitability of prices sooner or later returning to somewhere around their long long norms. Compared to incomes this seems at least 30% in real terms.. It would seem a bit optimistic at this stage of the cycle to see incomes rising to avoid the correction.
November 23rd, 2009 at 8:06 pm
Compare these two houses and you will know how over priced New Zealand houses are.
http://www.propertyworld.com/propertyDetails2.cfm/propertyID/3077056/image/18149129#imagepos
http://www.trademe.co.nz/Trade-me-property/Residential-property/Houses-for-sale/auction-255592864.htm
November 23rd, 2009 at 8:22 pm
@ John. Agree on NZ property market overpriced rah rah… but look at where that US house is… Palm Springs/Palm Desert! A subdivision wasteland 100km or 3 hours from a decent beach (and this is highly subjective since US is a rubbish tip). The NZ house is right next to Totara park with great surroundings and easily less than 10min to a beach.
I think a better comparison between houses in US ‘mega-divisions’ and NZ housing is say, lot+build packages in Pegasus Village. An equally engineered wasteland by definition.
There isnt much difference in those prices in $NZ… both have room to fall.
November 23rd, 2009 at 9:09 pm
It looks like its touch and go whether we sneak over 20K net migration for the year.
Real figures are at a nudge over 17K, might get an extra 2K in November, December is usually not much more than 500
Tony Alexander in his usual pro-housing speil was talking up 25-30K a few months ago (WRONG), even Deutsche Bank said today we’ll get to 25K! Either they are dumb or putting spin on things for their benefit
So Murray (if you are out there) my prediction about 5-6 months ago of us not getting to 20K could still come through against all the bank economists’ predictions
It will be close!
November 23rd, 2009 at 9:26 pm
Perfect timing Matt, I was just looking up our old posts! Hope your hat is made of something tasty
http://www.interest.co.nz/ratesblog/index.php/2009/07/22/too-many-rental-properties-hits-rents-may-lead-to-more-for-sale-first-national-says/#comment-30200
# Matt in Auck Says:
July 22nd, 2009 at 9:25 pm
Murray – I think you are fairly balanced for a property bull and I was certainly never accusing you of implying “heavily rising demand”, but there has been a lot of crap coming out of the mouths of economists and property guys to that effect.
For example westpac:
“Annual net migration is heading for 25,000+ by year-end. The surge of people will be a huge swing factor for the economy, and has already contributed to a housing market
turnaround”
I’ll eat my hat if we get over 20K
# Murray Says:
July 22nd, 2009 at 9:39 pm
Matt – I’ll hold you to the hat-eating by Xmas! You should be ok, but it’s not a bet I would want to take
# Matt in Auck Says:
July 22nd, 2009 at 9:42 pm
OK Murray, I’ll make a note of that and we’ll see at the end of the year
November 23rd, 2009 at 10:58 pm
I reckon I won’t have to eat the hat. Net migration in December hardly ever rises much above 400 or 500 even in buoyant migration years, and as we are sittign at circa 17,300 for the year that means we probably need 2000+ in November.
And November isn’t usually that high either as lots of the international students go home
I’ve put the barbecue sauce to one side, will get it out to accompany the baseball cap if required
November 23rd, 2009 at 11:11 pm
Dec 08 – 139
Nov 08 – 1040
Dec 07 – minus 106
Nov – 1800
Migration is up this year of course so it will be touch and go
My point really with these things is not to prove how smart I am but to show how often the bank economists get these things wrong. Either they are poor forecasters OR they have vested interests in talking all these things up.
Unfortunately I suspect its the latter despite their self proclaimed “independance”
November 24th, 2009 at 8:59 am
I think Keiran has is spot on.
This is less people leaving – probably because they can’t get a job in OZ or have money for a trip?
It is not more cashed-up immigrants coming in and I don’t see where the banks are getting this idea from, other than trying to talk up the housing market.
November 24th, 2009 at 10:10 am
Matt – given immigration is now the highest for 7 years, Nov & Dec will llikely be higher than 07 & 08 years – keep that bbq sauce handy!…..
I agree bank economists are frequently wrong, as are many other commentators. The exchange rate is something they are quite often completely wrong with. I wouldn’t want their job though, as soon as you put an accurate figure on a forecast you have a good chance of being wrong. Sometimes they use a range to increase the chance of being right, but then they are lambasted for being vague…..
———————————————————————
Three economists went out hunting, and came across a large deer. The first economist fired, but missed, by a metre to the left. The second economist fired, but also missed, by a metre to the right. The third economist didn’t fire, but shouted in triumph, “We got it! We got it!”
November 24th, 2009 at 10:21 am
Novo – it doesn’t matter if it’s less people leaving or more people coming, positive migration equals more houses needed, negative migration equals less houses needed. If they can’t afford to buy the only other option is rent.
There’s also natural population growth to account for, though as Harriet kindly pointed out in another post, babies don’t buy or rent houses. The questions then are, of the babies born 15 – 30 years ago, how many moved out of home last month or last 12 months? How many went overseas? How many went flatting? boarding?
The whole equation is obviously quite complex, and economists (as well as us bloggers!) are really only making rough guesses with rough data……
November 24th, 2009 at 11:01 am
Murray thats a slightly simplistic view which the bank economists subscribe to as well
Its true to a point, but remember many of the people not leaving NZ now are 20 somethings who will be staying with mum or dad or their mates, which creates negligible additional demand for housing
there is an article in the herald today that states that rents have dropped again, this would support my argument. If lots of young kiwis were postponing their OE and looking to rent or buy then we would not be seeing this stagnaiton / drop in rents
November 24th, 2009 at 11:19 am
Matt – the herald article goes against an earlier Barfoots article saying it’s average rents had increased 4.9% last month and gone above $400 for the first time….
I would have thought an increase in rental listings over summer would be quite normal with local and international students both going home for xmas…..
As I said, the whole housing supply/population demand equation is quite complex and it’s realistically impossible to put accurate figures on, which is why simplistic equations get used. Price movements are perhaps the best indicator, but they usually occur after the fact……
November 24th, 2009 at 11:22 am
“I’m thinking of leaving my husband,” complained the economist’s wife. “All he ever does is stand at the end of the bed and tell me how good things are going to be.”
——————————————————–
Economics is extremely useful as a form of employment for economists.
——————————————————–
The First Law of Economists: For every economist, there exists an equal and opposite economist.
The Second Law of Economists: They’re both wrong.
——————————————————–
We have 2 classes of forecasters: Those who don’t know and those who don’t know they don’t know.
— John Kenneth Galbraith
——————————————————–
An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.
— Laurence J. Peter
——————————————————–
How can you tell when an economist is lying?
His lips are moving.
November 24th, 2009 at 12:25 pm
I think the govt is smart in letting in moneyed migrants. Majority are coming from the UK, India and China. Many of these are cash-rich, having sold their homes in the UK, India and China. It’s like foreign investment into the economy !!!
Been to an auction recently. House CV was 510K and sold for 600K. The room was full of very obvious migrants tyring to outbid each other.
In a way, NZ govt is just capitalizing on NZ’s strength – its beauty and lifestyle, which is attractive to people who have the money to enjoy these. People who want jobs don’t come to NZ. They go to places like Singapore where there are plenty of jobs.
November 24th, 2009 at 12:37 pm
There are just so many sad points in williams post that I don’t know where to start.
November 24th, 2009 at 1:32 pm
Murray, just because they are here doesn’t mean they will go and buy another house. If they are already here, they just stay here – OK simplistic, but not evryone who hasn’t left needs to buy a house.
Be interested to see figures as someone else asked – how many of those not leaving can afford to buy a house, even if they want one?
William, a friend has been to a lot of auctions in ChCh recently for a 2 or 3 bed house – most had no bids, a few had bids, but the owner wanted a lot more and 1 or 2 sold. Looking on trademe and QV a lot of houses are selling below RV.
November 24th, 2009 at 5:14 pm
Hi Novo – I didn’t say they would all buy a house, I said “If they can’t afford to buy the only other option is rent”. If there’s 20,000 more people in to the country than out in 2009, that creates demand for about 7,000 to 10,000 dwellings. Some people will buy, some people will rent. It then depends whether there are enough vacant dwellings (supply) for sale or rent as to whether it creates a shortage or not.
Notice I said “vacant” dwellings, because if a dwelling isn’t vacant then the owners or tenants will most likely be moving to another house, so the total number of listings (either for sale or for rent) doesn’t equal available supply.
November 24th, 2009 at 10:00 pm
Murray I don’t think you are factoring in a possible increase in occupancy rates, more younger people are staying with their parents and older people living with their children etc.. and generally more people sharing houses to reduce accomodation costs. It only takes a 0.1 increase in occupancy rates to have a massive effect. There are around 1.6M dwellings in NZ for 4.3M people = 2.7 per dwelling if that went up to 2.8 it would leave 56,000 dwellings empty. I believe this is the main reason why there is increasing numbers of vacant rental properties available and also why rents will probably start falling again.
November 25th, 2009 at 8:04 am
Cheers Kieran, that’s an interesting point. It might go someway towards explaining how we currently seem to have quite strong population growth with no apparent surge in demand for housing. It certainly doesn’t take much increase in occupancy rates to have a large effect!
So 56,000 dwellings vacated by 2.7 people would be just over 150,000 people moving to already occupied dwellings – certainly feasible during a recession, and also with ongoing affordability issues of ownership.
It could possibly swing the other way once out of recession though? This is the type of data that isn’t easily available, doesn’t really get taken in to account, and as you say can have massive effects……..
November 25th, 2009 at 10:42 am
Kieran – just looking at those figures again, with the numbers I had earlier of immigration at 20,000 creating demand for 7,000 to 10,000 dwellings (either owned or rented) – it would only take an increase in occupancy rates of 0.02 people per dwelling to completely wipe that out! A rate of 2.72 would empty out 11,700 dwellings.
So it would seem occupancy rates could actually have a much larger effect than immigration? Interesting.
Mind you, although it seems at the moment that occupancy rates are possibly increasing, it could just as easily swing the other way and add demand for another 10 or 20,000 dwellings to the 10,000 already required by immigration…..
Just looking at Stats NZs census data:
1996 occupancy rate 2.76, population 3.762m, dwellings required 1.363m
2001 occupancy rate 2.67, population 3.916m, extra dwellings required 103589, dwellings built 1996 – 2001 approx 107,500
2006 occupancy rate 2.68, population 4.211m, extra dwellings required 104676, dwellings built 2001 – 2006 approx 142,000
So (if my figures are correct!) even though the population growth was double in 01-06 (300,000) compared to 96-01 (150,000), the new dwelling requirement remained similar at just over 100k, or 20k per year, thanks to changing occupancy rates.
It also shows quite an oversupply towards the end of the last boom, which I suspect has now been countered thanks to low building rates and rising immigration – though it seems this will largely depend on occupancy rates!
November 25th, 2009 at 1:41 pm
Murray yes occupancy rates could possibly swing the other way, they have been decreasing since the 70’s but there has to be a point when they stop falling most of the new dwellings built in the last 10-20 years are much larger and with more rooms and bathrooms than older houses which is one of the reasons given for higher house prices but it also means more people can live in them. I believe over the next 20 years most new houses will be smaller 1-2 bedroom townhouses, units etc.. to meet the needs of an ageing population.