Stronger net inflows may support demand but test RBNZ resolve
New Zealand’s migration cycle is turning higher again, with ASB highlighting that stronger‑than‑expected inflows could add to demand and inflation pressures, which in turn may influence mortgage rates and borrowing capacity.
ASB economist Wesley Tanuvasa (pictured) notes that “there is growing evidence that the migration cycle is on the up”, with permanent and long‑term net inflows rising to around 23,200 in the year to January 2026, up from about 14,000 a year earlier.
While this remains well below the long‑run norm of roughly 50,000, annualised net inflows over the past three months have lifted to 40.9k – the strongest since April 2024 – as departures ease and more non‑NZ citizens arrive from markets such as China, India, and the Philippines. The bank highlights that Kiwi flight has effectively stalled, with departures no longer rising and expected to retrace as the domestic recovery beds in.
Taken together, the trend suggests population growth will provide more support to housing demand and rental markets through 2026, particularly in main centres that typically attract new migrants.
Implications for the RBNZ and mortgage rates
ASB stresses that migration data are volatile, but warns “there is a risk that the pace of recovery (and flow-through to spending demand) may be too fast for the economy to grow without generating additional inflation.”
That could complicate the Reserve Bank’s efforts to bring inflation back to target and may reduce scope for early cuts to the official cash rate.
RBNZ has struck a similar tone in its latest forecasts, noting in its February 2026 Monetary Policy Statement that migration has eased from its 2023 highs but still “supports capacity and demand” in the economy, and warning that stronger‑than‑assumed net inflows could keep inflation pressures elevated for longer than expected.
Tourism rebound adds to demand backdrop
Tourism is also strengthening. Tanuvasa notes that “tourism continues to improve, with short-term visitor arrivals reaching 3.52 million in the year to January 2026,” still just under 10% below pre‑COVID peaks. Australians account for nearly 90% of the annual growth in visitor numbers, while higher‑spending US tourists are also increasing.
A weaker NZ dollar and a broader lift in visitor spending could further underpin regional economies and housing markets. Recent sales data are already pointing to a cautiously improving housing market, with REINZ reporting a 0.4% annual rise in the national median price to $753,106 in January, even as nationwide sales volumes fell 5.4% from a year earlier as buyers remained selective.
Read the full ASB analysis here.
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