Migration's impact on housing demand is now almost negligible, which should ease housing supply pressures over coming months

Migration's impact on housing demand is now almost negligible, which should ease housing supply pressures over coming months

The idea that thousands of returning New Zealanders will boost demand for housing and help prop up the property market and boost prices in the process may be nothing more than an urban myth, or perhaps some wishful thinking put about by players within the real estate industry itself.

The latest migration figures from Statistics NZ show that while there was a significant turnaround in the migration patterns of New Zealand citizens in the second quarter of this year, it was overshadowed by even bigger changes in the migration patterns of non-New Zealand citizens.

In the second quarter of last year, 6830 New Zealand citizens returned long term after an extended stay overseas (these numbers exclude short term travel), while 9841 departed long term, giving a net loss of 3011 New Zealand citizens for the quarter (see table blow).

In the second quarter of this year those flows had reversed, with 2487 New Zealand citizens arriving long term, which was down 64% on a year earlier, while just 402 departed long term, down 96% on the same period of last year.

That gave a net gain of 2085 NZ citizens in the second quarter, compared to the net loss of 3011 a year earlier.

So yes, that would have boosted demand for housing from returning New Zealand citizens.

But overall demand for housing from migrants would still be way down from what it was a year ago, because more migrants from other countries are leaving New Zealand than are arriving.

In the second quarter of last year 23,111 non-NZ citizens arrived in this country long term, while 12,320 departed long term, giving a net gain of 10,791 non-NZ citizens for the quarter.

But in the second quarter of this year those flows had reversed, with just 913 arriving long term and 2197 departing long term, giving a net loss of 1284 non-New Zealand citizens.

Statistics NZ's data series for those figures go back to 2001 and the second quarter of this year was the first time they have ever recorded a net loss of non-NZ citizens.

Overall, that reduced the net population gain from migration from 7780 in the second quarter of last year to just 802 in the second quarter of this year.

That suggests demand for housing from migrants, whether they be returning New Zealand citizens or citizens of other countries, was down by 90% in the second quarter of the year compared to the second quarter of last year.

With the supply of new homes coming on stream remaining buoyant, that will have a considerable impact on the balance of supply and demand.

While demand for housing from people already living here should remain as strong as ever, migration driven demand has likely tailed off to the point where it is now only having a minor impact on the market.

If current trends continue, that should ease housing supply pressures over the coming months.

There has also been talk of more wealthy migrants from countries such as the UK and the USA moving to New Zealand as a safe haven from COVID-19 and the related social and economic turmoil it is causing. But so far, the numbers do not support that theory.

There were more long term departures from New Zealand by UK and USA residents in the second quarter of this year than there were long term arrivals, giving a net loss from both countries. 

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NZ Migration Trends by Citizenship
June Quarter 2020 compared to June Quarter 2019
  Q2 2019 Q2 2020
Country of Citizenship  Arrivals Departures Net Gain/Loss Arrivals Departures Net Gain/Loss
New Zealand 6830 9841 -3011 2487 402 2085
Australia 1454 1075 379 118 110 9
China 2869 2246 622 163 461 -298
Hong Kong 191 103 88 23 17 6
India 2062 832 1230 132 65 68
Philippines 2753 351 2403 21 10 11
South Africa 2558 107 2451 75 15 60
United Kingdom 1638 1631 7 72 257 -185
USA 677 703 -26 85 113 -28
Total non-NZ citizens 23,111 12,320 10,791 913 2197 -1284
Total All Citizenships 29,941 22,161 7780 3400 2598 802
Source: Statistics NZ            

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82 Comments

37
up

It always seemed very optimistic re returning Kiwis. NZ has a high cost of living, poor quality housing stock and limited job opportunities at wage levels well below Oz and Asia. But probably as importantly folks have lives in foreign countries, the idea that tens of thousands will uproot and resettle here is indeed nomsense.

14
up

Especially now that we've proven we're not actually Covid-free, and that we rush to extreme lockdown measures at the drop of a hat, unlike other cities and countries (eg. Sydney, Germany) who are simply managing cases while life goes on as normal.

What K.W. said

Definitely not keen on this, bet you if someone died in your household your opinion would change. NZ is one of the best places in the world, as someone who is living through it and life is like living in another dimension. Cant visit friends, cant go to pubs, and this is by choice, as the government in the UK is nuts, it is rampant with thousands of deaths. My kids cant visit friends as its to much risk. Its an uncertain life, and horrible life where you walk around scared of catching something, everyone with face masks in supermarkets and towns. NZ if it goes hard and contains it, you have a relatively normal life. If only we can could have something so good.

There are poor qualty homes in NZ - & every where else in the world. There are also plenty of very good quailty houses. I cant understand the blanket assertion that all NZ houses are poor quality

Peter, I think it comes down to the percentages and perceptions of what 'quality' means. I think we can agree that no matter where in the world you look, the highest percentage of homes are for the working class. These will be relatively ' low value' compared to the ruling class or upper class or political class homes (nomenclature changes around the world of course) so what 'quality' means to a worker in Germany or Oman differs little from our worker housing in NZ. Warm, water tight, low maintenance or whatever your climate demands will be the standard that is broadly accepted. In NZ, our worker houses are generally of very flimsy and poor quality material and very high maintenance. I have never lived in or owned a house in NZ that I consider 'up to standard' they have all been a bit sh*t to be honest. The final kicker is that they are eye-wateringly expensive! even for a do-er upper in some dodgy neighbourhood. A German or an Omani would roll their eyes and accuse you of having a laugh!

14
up

I grew up in Hungary where the standard cheap housing equates to hideous concrete blocks that resemble hives more than houses. They were built (mass produced) in the communist era, the goal being housing as many people as possible for as cheap as possible.
Even these disgusting, ultra-cheap (back then), low quality, mass-produced blocks can be kept nice and warm at a reasonable cost during winters when the outside temperature goes down to -20 Celsius.
During my 29 years of living in Europe, I've spent one or more night in about ~100 different houses / flats / huts. I can remember 2 out of those being as poorly insulated as *all* the houses I've stayed in in New Zealand.

Peter, there are not plenty of 'very good quality' houses. The current building standard in NZ is UK circa 1980. No central heating systems, no thermally broken window frames, insulated slabs as the exception not the rule, prob less than 50 passive haus quality buildings in the entire country. Wake up and smell the coffee.

If you've ever lived abroad in North America or Europe, it completely changes your expectations of housing. My girlfriend is a Russian migrant here in NZ and can't believe this housing exists in a first world country.

I live in the UK, and comparing the pebble dash coronation street houses, squashed together where the roads are over grown with weeds. I live in Surrey and it always amazes me how dirty the environment is, and Surrey is a nice area in the UK. Some houses in NZ I get. But in general NZ has nice open roads with plenty of space, gardens along the roads and well looked after. The houses are fine, some have dampness, but easy to fix. Obviously if you have higher expectations and the grass is greener etc, etc. I have lived in many types of houses in NZ, grotty ones and nice ones. Give me NZ any day.

Weĺl Glitzy, with Oz unemployment reaching one million now I wonder how many kiwis are effected directly or indirectly, i.e. australians who are unemployed looking at kiwis who are employed. I found the latter nerve wracking when I was employed there prior to covid.
In these times, a roof over your head is the main objective together with a job is desirable. Could a number of these specialised positions be filled from returning kiwis.

12
up

Thanks Greg. Good detailed data showing that net immigration is not adding anything to demand in Q2.
Price gains over CV esp in more expensive brackets in Auckland (over $1.5m) seem more to do with people being prepared to pay over odds for secure place to invest cash with massive stock market decline inevitable (hyper inflated markets up in USA for example 51% off the lows) as economic reality hits with lockdowns not banished. The surge in sales and prices in Auckland since 2009, mostly fell (hyperbolic phase) in 2014-15. Since when it has been in decline, except for period November 2019 to date. This last 8 months I feel, is connected with upper bracket gains in sales and prices due to above factors (safety seeking.) A lot of this purchased property will not be occupied but is just somewhere for super rich to stash cash. Remember that corporates are $9 trillion in debt which they used to buy back shares and cashed them out at peak. All that money is looking for a home and corporates do not have to declare country of origin when buying in NZ.

Note also that 2018 census forecasts a drop in numbers of adults in the crucial demographic (see Prof Spoonley today on same subject) of 25-54. That is prime buying group. So demand for housing will continue to fall (real demand, that is, ie people actually buying, not NEED, which is entirely different) Supply meanwhile is over-shooting due to to ramped up consents 2016 to date. So, as usual in housing building cycle, the two forces met at wrong vector and head off in incompatible directions. Over supply plus tightening credit criteria: what happens then...?

22
up

Of course it's a myth, and it's one promoted by 'economists' like Tony Alexander who *should* know better.
Shameless.
The RSV's (Rent Seeking Vampires) love it though.

10
up

Might just be my very narrow focus on what I follow, but seeing more listings stating "Overseas vendor wants it sold!" (migrant heavy areas like NSC)
I can't really make up my mind on what is happening, if only because it is bizarreo world out there where fundamentals don't make any sense.

China is hurting. If you look at air quality as a good reverse indicator its fair to say Chinas factories and,domestic economy are slowing significantly. Add to that the Chinese are savvy investors. The question in my mind is whether this trickle of sales will slowly develop into a tide.

Fritz - If you took the time and read Tony's column called Tview Premium ( $110/year ) which is based on his own surveys you would realize how ridiculous your statement about him is. He is remarkably consistent in being very accurate of how our economy will operate in the future. The other end of the spectrum is Cameron Bagrie who always over dramatizes and over shoots in the negative with his predictions. We all have an opinion but I have followed Tony for over 20 years, and he has assisted me becoming very wealthy. That's my experience so bagging him is being ignorant of his talent.

Sorry, but I didn't comment at all about the accuracy or nor of his forecasts. I agree he has been one of the more accurate forecasters, even if I can't stand his arrogant and patronizing personality.
I was commenting on a specific views of his, which is that a flood of returning, cashed up kiwis will bolster the housing market. It's a totally unscientific view that isn't supported by data.
Economists should be led by objective data and analysis, not by what pleases their audience.

Fritz, you have not read TView, if you had you would know that Tony supports his claims with immigration numbers (over slightly different periods). It's just that you believe Interest's numbers. For my part I don't know which view is more accurate, so I have emailed Tony with a link to this article and asked him for clarification.

Does Tony run the alternative statistics society ? I maybe clutching at straws here, but at a guess stats NZ should be pretty close to the truth, although they have had their issues.

Ok, Yvil, I look forward to the evidence - I wait in anticipation.
I strongly suspect that it's baseless speculation that suits his argument and the self interested greed of his subscribers, many of whom are multiple property owning investors...

He has replied me and he pointed me to his TView of 4 weeks ago, where he delves into immigration numbers. As many like to make fun, it's a subscribers only email and its content is not to be publicly shared.
Fritz, more worryingly, whilst Interest provides great articles, it's not the only source of journalism and following only one source, no matter which one, invariably leads to tunnel vision and bias. For your own good make sure you remain open minded to other views

I think the rather simple question is what is the source of his data? Interest clearly states Stats NZ.
Any of his proprietary data doesn't need to be shared, just the source behind it.

Personally I don't care for Tony, but I have my own bias based on what I heard from within BNZ years ago (Stephen Toplis was the respected economist at BNZ, not Tony).

That is a 'nothing' response, I am afraid.
Weak.

Why is it you feel the need to consistently promote Tview Premium? Maybe you should disclose your links, Tony?

yeh, mentioning his service is one thing, mentioning the price is another. Suspicious.
Are we allowed to advertise in comments????

Tview Premium is what everyone’s talking about
Only $110 too
Best commentator on NZ economy is our Tony Alexander
Oh, and you can also get Tview Premium for only $110, be quick, don’t dither on the sidelines

I'm sorry, I only go for deals with steak knives

does it have a sports and "adult" channel?

It's a shame that children are allowed to comment on Interest...

11
up

Hasn't stopped you typing away.

Com'on Glitzy, why not add "Naaa na na na naaa" while you're at it. How about we keep the discussions at adult levels please?

10
up

You started it.

You are a troll lacking any substance in any comment.

Not interested in having a puerile conversation. Bye

12
up

Karen left the building.

The troll has been banished. Children danced on the streets knowing Interest is indeed a safe place to comment :)

ooh...you wait till recess.

If you took the time and read Tony's column called Tview Premium ( $110/year ) which is based on his own surveys you would realize how ridiculous your statement about him is

I took Tony Alexander to task about his "surveys." In one instance, he was framing the findings as somehow representative of the wider public and I exposed this in front of him and his peers. I found this quite disingenuous as a 'professional.'

Let me guess. His advice was to leverage up to the eyeballs on property and roll around in tax free capital gains?

Won't be surprising if the exact opposite happens, where the returning lads and lassies (saviors of the ponzi scheme) make a bee line for WINZ, cap in hand.

So many people coming and going through the borders in both directions.
Shouldn't the borders simply be closed? And only full citizens who wish to return permanently allowed in?
The housing market seems to be ticking along with or without returning kiwis.
But a nationwide L3 for 3 weeks, and an uncertain election date might either produce a speed flurrie, or a decline.

So many people coming and going through the borders in both directions.

Oh yes. Keep away from Auckland International Airport. The crowds and traffic are nightmarish.

You've changed your stance.

I thought Kiwis were returning in droves to buy houses and Aussie superannuation would save the day?

The numbers proved your subjective theory wrong buddy.

11
up

Im pretty sure TTP has alternative facts on this.

TTP? Facts? More like vague references to "other people's" opinions... He never uses numbers.
"Some people are saying, that their friends think their neighbours would say that a big house price increase is coming..."

16
up

No sane person would buy a house in NZ at this time. Maybe in a year or two if/when prices go back to 2014 levels.

FB - The dinosaurs will roam the Earth before you get your wish. I would say every sane person should buy a house now. In a year or two or probably 4 or 5 prices now will look really cheap. The great thing is we all get to find out I'm picking 40-50% within 5 years, we can check in then 2024/2025.

22
up

Do you have any idea how disheartening that is for the average NZer who currently doesnt own a house ?

13
up

They don't care because they are ok

If you choose not buy a house today in the expectation they fall in price and you get that wrong, do you put your hand up and admit it or blame the RBNZ/Labour/RSV/the cat???

It's a big call and perhaps you don't have the financial acumen to take such a risk?

He and other RSVs simply don't care.
They are driven by self interest.

Sluggy, I understand and agree this is disheartening for people not owning a house. But for one to get ahead and reach what one wants, it's very important not to confuse what one would like to happen (house prices to fall) with what is actually happening.

Nobody knows what is happening. What we do know is that property prices are at EXTREME levels compared to historical norms and the economic outlook has never been darker or more uncertain. The future could be up, down, sideways or in circles. The virus certainly doesn't seem to believe in kiwi exceptionalism.

From the vantage point of a younger person its an insane gamble with inconceivable sums of borrowed money that they cannot afford to lose. Guess the wrong way and you (and worse your dependant family) are ruined.

The rent seeking vampires (RSV) come across as a bunch of particularly greedy people talking up their own book with scant regard for the devastating consequences these financial games have on kiwi families.

Apparently we should all celebrate casino capitalism though. The house always wins?

Its a rare week that goes buy without I receive some notification of price increase for some element of a new house. Prices for new houses will certainly continue to rise as a consequence

I wish this was true but the reserve bank is getting ready for negative cash rates, planning for lending directly to banks at lower rates, LVR is gone, and banks have lowered their serviceability threshold rate (this is a big one). It really is throwing everything at it and there's going to be lot of people who will take advantage of the situation who will push the market up, outweighing those that are forced to sell. There is no doubt that they are trying to boost the housing market and I think they will succeed. Again as a potential first home buyer I wish this wasn't about to happen.

Foreign Buyer: "No sane person would buy a house in NZ at this time. Maybe in a year or two if/when prices go back to 2014 levels"

You do know that record numbers of people have bought houses in the last 5 weeks, many more than a year ago? So you're saying they're all insane (and you probably think you're the sane one)

You do know that a record low number of people have bought houses in May, 50% less than a year ago?

Yes, I also know NZ was closed in April due to lockdown level 4, and half of May on level 3 therefore few could view houses to buy in May

Very good! Now think about it... is it possible, that there's some connection between people "not being able" to buy houses in May, and the high number of houses sold in June and July?

Person, Woman, Camera, Man, TV

You can't do that!

Thanks Greg. So good to read an article which is telling the story and not pushing a narrative. This is why I am happy to contribute to intdotco.

The "returning kiwi's boosting the housing market" idea has come entirely from those with a vested interest, and there has been been scant evidence to support it.

The actual migration data shows what was previously driving total housing demand (both rents and house prices) is now almost a non-factor. But what hasn't changed much is the total new housing (consented years ago) coming onto the market. The mortgage deferrals and wage subsidies are also putting a temporary hold on any impacts, combined with a "backlog" of people trying to find accomodation, all means it will take a while to play out.

Both the demand and supply side of housing are both going in the right direction to reduce our housing issues.

Exactly.
But Yvil seems very confident that Alexander will have objective data to back up the claim.
I am not holding my breath...

10
up

Sure there may be the odd perminant return. A lot are back to mum and dads and free dole, and when it "all clear" they are gone again never to pay tax here again.

All the successful 'cashed up' people I know who are based overseas are staying overseas. And that even includes a couple of people who have lost their jobs.

Imagine if the only way to stop a housing crash was to pay peoples wages who are not working and to allow mortgage holders to not pay their mortgages (or have a holiday ; ) . Sorry spruikers there is only one way from here.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=123...

Negative rates man, they'll pay you to take out a mortgage haha. In this topsy-turvy world it makes perfect sense!

One thing is for sure and that is that speculators should never be expected to stand on their own two feet and take responsibility for their own risk.

Immigration and FB is absent but still housing market is touching new height despite panademic and recession as supported by QE and low interest rate.

Yep more spruiking by the property industry. Examples everyday in The Herald. Wonder when they are going to cover all the houses that have been for sale for months. Maybe these almost non existent overseas Kiwi buyers could buy those? When you see spruiking at the level seen in Australia and New Zealand you realise both countries have too many eggs in one basket.

Noticed that was the figures for citizens only . Any figures for permanent residents?

Presumably permanent residents make up a large proportion of the non-nz citizens entering the country.

People that were NZ residents but not NZ citizens, would be included under their country of citizenship. 

Maybe these are some of the returnees that Tony A and other RSVs think will bolster the housing market:
https://i.stuff.co.nz/national/health/coronavirus/122424628/coronavirus-...

Right - Not a lot of sustenance there for an RSV - barely a light snack and move on. I suppose a whole, like, suburb of them could add up...

The words "accommodation supplement" get the RSV's juices flowing

"If current trends continue, that should ease housing supply pressures over the coming months.
There has also been talk of more wealthy migrants from countries such as the UK and the USA moving to New Zealand as a safe haven from COVID-19 and the related social and economic turmoil it is causing. But so far, the numbers do not support that theory.

There were more long term departures from New Zealand by UK and USA residents in the second quarter of this year than there were long term arrivals, giving a net loss from both countries."

The upshot of it is, if Auckland sales start to soar again then it's more then likely from our old favorites who are currently sending UK prices up. FT article: Hong Kongers eye UK property as they weigh escape routes
British homes are relatively cheap for city residents unnerved by new security law. https://www.ft.com/content/095d38d3-c5c6-43eb-b428-c72ffd08a5fe

Why would anyone from the team of 1 million sacrifice their mobility for an indefinite stay on Paranoia Isle?

There is quite a big leap in this article. The leap is that it combines returning NZers with Non NZ citizens, and assumes both act the same when it comes to buying property.
Are we to assume that the net increase of >2,000 cashed up NZ citizens returning to NZ would not be wanting to buy property? I’d suggest they are more likely to buy and are the greater number.
Are we to assume the non NZ citizens arriving from India and South Africa will buy property vs renting? They are less likely to buy property (at least initially) and are the lower number.
The demand for property is demographically different so why are you combining the two into the same statistic.

I dunno about the assumption that returning NZers are 'cashed up'. Purely anecdotal, but the ones I know are all young people who were in Aus, working in eg. hospitality... lost their jobs or just felt it was too risky to stay with places closing left right and centre and no access to social welfare. Very far from 'cashed up'. No doubt there are some, but I'd like to see actual numbers.