Net Migration peaks at 96,000 setting a new record

Editor’s Standfirst: Contrary to the popular belief that New Zealand is ‘being deserted’ by a massive exodus of people, especially to Australia, figures published in this article show that the reality is otherwise and that there is a steady inflow of people from Australia, the USA and the UK. While the government must take steps to attract and retain talent, the situation does not seem to be as alarming as it has been made out to be. We seek experts’ views on this issue.

Net migration has continued to charge higher and has risen to the highest level on record. 

Updated figures showed that the number of people arriving on a permanent or long-term basis exceeded those departing by 96,000 in the year to July.

That is a stark turnaround from this time last year when saw we around 15,000 more people leaving the country than arriving.

Looking at what is driving the rise in net migration: 208,000 people arrived in the country on a long-term basis in the Year to July.

While the number of New Zealanders returning home has remained steady, we have seen sharply increased arrivals from regions such as India, China and the Philippines. We have also seen steady inflows from Australia, the US and the UK.

There has been a large rise in those coming in on work or residency visas. At the same time, the number of people arriving on international student visas has risen to around 28,000 – back around the highs that we saw in the decade before the pandemic.

Long-Term Departures

We are also seeing more people leaving the country, with 112,000 people departing our shore on a long-term basis over the past year.

We were already forecasting that net migration would rise to a peak of 90,000 and we are now past that. At the current pace, we are on track to reach an annual net inflow of 100,000, perhaps as soon as next month.

The inflow of migrants into the country is having a big impact on the economy.

With many migrants coming over on work visas, employers have been telling us that it has become easier to find the staff and skills that they have been looking for. At the same time, the increase in the population is helping to support spending levels in the face of tighter financial conditions.

Impact on Housing

Migration inflows may also be affecting the housing market. Rents have been rising at a solid pace, with larger increases in Auckland (where a large number of migrants traditionally settle). Recent months have also seen the housing market finding a base, and we expect that will again be reflected in tomorrow’s update from the REINZ.

International visitor numbers rose to 2.6 million in the year to July, likely to have been boosted by the FIFA Women’s World Cup.

Arrivals in the month of July were 84% of the pre-pandemic level in July 2019.

We expect further gains over the coming year.

However, with Chinese tourists slow to return to our shores, it will take some time before international visitor numbers fully retrace pre-pandemic highs.

Retail Spending Levels 

Retail spending rose by 0.7% in August. That was close to our forecast for a 0.6% rise.

However, while spending levels are holding up, that masks softer conditions in the household sector. In part the resilience in spending is due to strong population growth – per-capita spending growth is much softer.

In addition, with consumer prices continuing to rise rapidly, much of the increase in spending levels reflects higher costs, rather than households taking home more goods.

Satish Ranchhod is a Senior Economist at Westpac based in Auckland. The above analysis appeared in the Westpac Economic Survey issued today (September 12, 2023).