Christchurch may lose 4% of its population - a net 15,000 residents - permanently over the next year due to the earthquake that devastated the city on February 22, making the reaction from government and the business sector crucial, ANZ economists say.
In a comment piece on post-quake migration patterns, the economists said the figure was made up of 9,500 residents deciding to leave permanently, 4,000 fewer migrants arriving from overseas, and 1,500 fewer internal migrants over the year.
The exodus would likely see existing pressures, such as a housing shortage in Auckland, intensify as Christchurch residents moved elsewhere, and as migrants who would have headed for the city went to others instead.
The 4% figure was a rough indicative estimate based on research on how migration flows were affected by weather related disasters, and migration patterns following the Kobe earthquake in Japan in 1995.
From ANZ's latest Markets Focus:
There are reports that as many as 65,000 Christchurch residents have left the city following the February 22 earthquake. This is around 17 percent of the city’s population. While it is understandable that many have chosen to go somewhere else, given the damage to homes, the big question is how many will decide not to return at all and what it will do to future migration trends. And for those that decide not to return, where will they choose to settle?
Looking at estimates of the permanent population loss following some recent natural disasters in developing countries suggest a large variation. The 1995 Kobe earthquake resulted in 2.5 percent of the population leaving permanently3. There was a far higher proportion that left following Hurricane Katrina and Rita in 2005. However, Florida only lost a very small proportion of its population following hurricanes in 1992 and 2004.
These are useful benchmarks, although it is impossible to lump all disasters into the same box. A key differentiating factor with regard to Christchurch has been the extended nature of seismic activity, which will exaggerate the psychological impact on residents. In addition, there will also be changes to the risk profile when businesses think about issues such as locality and where operations reside.
Over the past decade, Christchurch City has benefited from net gains in internal migration (i.e. internal immigration less internal emigration) of around 0.3 percent of the population per annum, or around 1,100 persons a year. Net gains from external migration (i.e. external immigration less external emigration) have averaged around 0.4 percent of the population per annum, or equivalent to 1,600 persons a year.
If we assume that the permanent emigration (i.e. outflows) either to another part of NZ or overseas is similar to Kobe, then there will be a loss of 9,500 people (2.5 percent of the population). In practice, this estimate is likely to be at the conservative end. While there are certainly frictions that will restrict labour mobility (such as selling your house), there are other New Zealand specific factors, such as the higher tendency for New Zealanders to head offshore (especially to Australia), at any given time. The number of permanent departures from New Zealand accounts for between 1½ and 2 percent of the population over the past decade.
Christchurch has also been a net beneficiary of migration from Australia – which goes against the national trend. Migration from England, Japan and Australia dominate the net inflow. Certainly there looks to be immediate risks to immigration from Australia and Japan. And migration research has also showed that NZ has been used at a springboard destination to Australia4. What is less clear is the impact on internal and external immigration (i.e. inflows), which account for almost 3½ percent of the population in any given year.
Of the roughly 7,500 external immigrants (i.e. permanent arrivals from overseas) arriving into Christchurch each year, it is possible that we could see a halving of that in the near-term. In fact this seems somewhat optimistic. And while we could also see a rise in internal emigration, the net effect will likely be far less as there will be people coming in to carry out essential work relating to assessing and repairing the earthquake damage.