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Will net migration flow cause a fresh upturn in our housing market?

By Debbie Jessup

By Tony Alexander, chief economist for the Bank of New Zealand

Migration data released by Statistics NZ last week suggests a net gain to our population of 56,000 in the year to February 2019, up from 49,000 in the middle of 2018, so we can say the migration trend is upward.  What does it all mean?

The net annual migration flow has averaged a gain of 29,000 per annum over the past ten years so the current flow is well above average. Population growth remains strong and this of course is a huge underpinning factor for the housing market – on top of recent decreases in mortgage interest rates and confirmation of no capital gains tax regime being put in place or even an extension of the five  year brightline test occurring! That’s an unexpected bonus.

But while the migration flows are supportive of house prices neither they nor the level of interest rates lead me to say or feel that a fresh upturn in our housing market is approaching.  This cycle did its dash in Auckland two years ago and will this coming year peter out eventually in the regions.

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The above is an excerpt from Tony Alexander’s Weekly Overview of 16 May 2019.  Sign up here to receive the Weekly Overview each Thursday night.

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