Recently, New Zealand has witnessed record high net migration. In the May 2016 year, 68,400 non-New Zealand citizens have migrated to New Zealand. Unsurprisingly, therefore, the media has been filled with reports on net migration and its effects on New Zealand’s economy; in particular the coincidental rise in house prices.
Net migration is a calculation of the balance between people moving to a country for more than one year (“immigrants”), and people leaving the country (“emigrants”), over a twelve-month period. Undoubtedly, social, economic and fiscal effects result from fluctuations in migration; however the degree of benefit to a country remains a contentious matter. In respect of the housing market, recent studies have shown a strong correlation between net gain and house price inflation.
Essentially, the correlation between net migration and property values is attributed to an imbalance in supply and demand. Similar studies focused on the housing market, determined migration flow quantified at one percent of the population, is associated with an eight to twelve percent change in house prices after a year.
We appear to be experiencing that correlation in New Zealand, as in the May 2016 year, New Zealand property values grew by around thirteen percent.