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The Double-Edged Sword

Some economists welcome surging migration, but it is a two-sided debate.

By: Sally Lindsay

1 February 2024

A huge surge of new immigrants crossing the border into New Zealand will be the big property market story
this year.

Mounting migration means more demand and higher house prices, says Kiwibank chief economist Jarrod Kerr, who expects a shallow recession this year that will feel worse than the migrant-inflated figures suggest.

The impact of surging migration is two-sided. On the helpful side there is more available labour, but at the same time fewer new homes are being built. And Kerr says New Zealand “will not build enough homes” for the influx of new migrants.

The number of building approvals for new houses has been steadily dropping since October 2022 and the country needs about 43,000 houses at an average occupancy rate to house the record inflow of migrants, predominantly from China, India, the Philippines, South Africa and the Pacific Islands.

Listings Down

“In an environment of strong population growth, this decline in new house supply can do only one thing to prices – push them higher,” says Tony Alexander, an independent economist.

While prices have been slowly
edging up, listings have been down. The 65,000 homes listed for sale last year was the lowest in 40 years, CoreLogic data shows.

Even if 10 per cent more homes are put up for sale over the next six months, the number of listings would still be about 20,000 below the typical average of 95,000.

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