New Zealand Rising Migration to Push House Prices Up Amid Labour's 'Housing Crisis' Fear
By Reissa Su | May 22, 2014 5:08 PM EST
New Zealand's annual migration is seen to go beyond 40,000 as more people choose to stay in the country. Analyzing these figures, New Zealand has gained 4,080 migrants in April compared with 3,890 in March. The number of migrants in April was found to be the highest since February 2003.
A pair of housing units are shown for sale in San Francisco
Based on a year-to-year comparison, the country had a net gain of 4,776 in 12 months ending in April 2013. The annual net gain is currently 4,400 compared to the previous 31,900. Statistics New Zealand said the last time annual net migration had been higher was between July 2002 and December 2003, according to reports. Net migration peaked at 42,500 in May 2003.
According to Infometrics Managing Director Gareth Kiernan said majority of the migrants came from Australia. About two-thirds of the increase was also attributed to New Zealanders returning to their homeland.
Kiernan added the increase in migration was mainly driven mainly by strengthening labor market in New Zealand. Compared to Australia's "struggling" economy and other labor markets overseas, New Zealand is an attractive place to work.
He noted although migration is not a concern if people have jobs waiting for them, the rise in migration also raises questions, particularly about the housing market.
Kiernan believed the housing market will feel "price pressures" throughout the year until 2015.
He said once the Reserve Bank's loan restrictions are lifted, housing may give in to "significant demand pressures." He predicted prices of houses in New Zealand will increase to a double-digit figure by end of 2015.
The Labour party pointed out that New Zealand experiences housing crisis, but Prime Minister John Key has dismissed the statement.
He stressed a combination of factors was driving New Zealand's housing market. He cited buoyancy in the overall economy and high levels of employment which motivate people to check "the housing market."
The prime minister said the housing boom will not slow down. Referring to the budget, he expects strong growth from the housing sector in the coming years.
Key attempted to divert the attention to the increase in house prices by 96 percent between 1999 and 2008 under the previous Labour-run government.
Despite the struggle to control prices in the housing market, New Zealand's growth forecasts in the past six months continue to increase due to strong exports, post-earthquake reconstruction and export growth.
According to reports, New Zealand's house prices continue to increase and reached a new record-high in April.
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