Immigration has hit its highest pace in more than 10 years, and that is expected to put further pressure on house prices.
There was a net gain of 3090 people in January, taking the annual total to more than 25,000 – the highest rate since 2004.
ANZ’s economists said the influx of people was pushing up demand for housing and supply was still tight.
Of the ten gauges the economists use to judge the direction of the housing market in their monthly Property Focus, migration was the only one pointing purely up.
They said increased migration had historically typically coincided with increasing house prices and more residential construction work. “The early 1970s, mid-1990s and early 2000s housing cycles coincided with large swings in resident population.”
They said the Reserve Bank estimated that an extra 1% in migration led to an 8% increase in house prices over the following three years. One new house was built for every six migrants.
“What is apparent this time around, however, is that house price inflation had already lifted before net migration flows started to strengthen. While there are demand-side facets, our analysis suggests that supply-side factors have also contributed to regional housing market differences. There is a low inventory of existing properties for sale in the Auckland and Canterbury markets, and in addition, housing construction has failed to keep pace with rising population in several regions, most notably Auckland.”
Affordability was getting worse, the proportion of weekly income spent on mortgage repayments has crept to a three-year high, interest rates seemed a one-way bet and listings have risen to a 15-year high as LVR restrictions put a damper on sales, they said.
Rents had started to climb after a stagnant period, and are now 6.1% higher than last year, the report said.