Net migration turns negative again as NZers start leaving for Australia again

A net 332 people left New Zealand to live overseas permanently in March, a turnaround from a net influx of 313 in March a year ago. This was the first net outflow in any one month since May last year. ASB economist Jane Turner said the migration turnaround, along with tax changes likely in the May 20 budget, would ease housing demand in coming months. A large reason for the turnaround in migration to a net exodus was a rise in recent months in the number of New Zealand citizens leaving to live in Australia, reversing an improvement that had been evident for most of 2009. There were also fewer migrants arriving as economic conditions improved in developing nations and New Zealand's economy failed to recover quickly. The number of New Zealand citizens leaving for Australia in March was 2,815 or 90.8 per day, while 935 New Zealand citizens returned from Australia in the month, giving a net migration loss from New Zealand to Australia of 1,880. The exodus to Australia has picked up since late last year as the Australian economy has recovered much faster than New Zealand's, thanks in part to the biggest mining boom in over 100 years. Meanwhile one bright spot was an increase in short term arrivals from Australia as cashed-up Australian tourists look for a cheap and fast holiday across the Tasman, particularly with our exchange rate headed for A$0.75. ASB economist Jane Turner said the monthly rate of net migration continued to ease. Her full comments are below.

The annual rate of net migration has now past its peak (of 22,600 in January) and we expect the annual rate of net migration to slow to just under 10,000 per annum. The recent slow down in net migration comes as the number of departures has began to recover, mainly to Australia. The Australian economic recovery continues to gather momentum, with employment growth outstripping that of NZ over the past 9 months. As the recovery at home remains slightly patchy in comparison to Australia’s, an increasing number of Kiwis are likely to be enticed across the Tasman. Short-term visitor arrivals picked up 1.1% over March and are up over 7% on year-ago levels. Much of the improvement has been the strong increase in the number of Australian tourists. Economic uncertainty has promoted many to take cheaper holidays closer to home. In addition, the low NZD/AUD makes its comparatively cheap for Australians to holiday in NZ. More recently, the number of Australian tourist arrivals has plateaued (on a seasonally adjusted basis). However, there has been a firm recovery in visitor numbers from China and Korea, which is a very encouraging sign that discretionary demand for overseas travels is improving along with the global economic recovery. Over the next year the slow down in net migration will reduce some of the current pressure on the housing market. The pick up in net migration during the recession acted as a helpful stabiliser, providing support for retail spending and housing services. The pick up in population growth helped stabilise house prices (indeed the housing market has staged a surprisingly strong recovery during spring last year). However, support from the net-migration impulse is set to gradually slow over the next 12 months, and combined with changes to tax policy around property investment we expect housing demand to ease.