Net immigration remains low, keeping a lid on housing
Net immigration into New Zealand remains well below recent norms, but there are early signs the downtrend may be bottoming out as the economy improves, according to ASB senior economist Mark Smith.
Permanent and long-term (PLT) migration recorded a seasonally adjusted net inflow of 990 people in November, with historical revisions lowering recent inflows. That left annual net PLT immigration at about 10,680 – “well below the 49k decade average” and a sharp comedown from the roughly 135,500 net inflow peak in October 2023.
Arrivals are around their 10‑year average at 132,600, but departures are still elevated at about 121,900 versus an average of 88,000. Returning New Zealanders were the largest source of PLT arrivals (27,000), followed by India (17,300), China (14,900), and the Philippines (10,500), although numbers from these countries are “well down on a year ago”.
Smith said low net immigration has “likely meant less support to domestic demand and the housing market in NZ”. The sharp slowdown over the past two years has been “a key contributor to lower population growth, softer domestic demand and the sluggish housing market”.
ASB expects the official cash rate (OCR) to stay at 2.25% through 2026, with 50 basis points of hikes pencilled in from early 2027. However, Smith cautioned that “a pick-up in immigration could… boost the economic rebound and reignite the housing market and inflation which will see the RBNZ hiking rates in 2026”.
In a separate report, ASB also says New Zealand’s economy is moving into a more hopeful 2026 after a tougher‑than‑expected 2025, with low interest rates, stronger balance sheets and a weaker NZD supporting the outlook.
Kiwis staying put as economy improves
While overall net flows remain subdued, the split between New Zealand citizens and non‑citizens shows a turning point may be emerging. Net PLT inflows of non‑New Zealand citizens have eased to 51,400 annually as arrivals cool and departures lift.
By contrast, the net outflow of New Zealand citizens has narrowed to 40,800 a year, from 43,900 a year ago. Departures of New Zealanders have plateaued at around 68,000 annually, with a small pickup in returning citizens to about 27,000.
“A stronger Australian labour market is likely to continue to encourage NZ citizen departures,” Smith said, “but with green shoots appearing in NZ, the tide may be turning.” With the economy “showing signs of a pick-up from mid‑2025 lulls”, ASB believes “we look to be past the trough in net immigration”.
Tourism at half-decade high as low NZD boosts spending
In contrast to subdued migration, inbound tourism is running strongly, with Smith saying it “looks to be humming”.
Visitor arrivals rose 0.8% in November on a seasonally adjusted basis, the fifth consecutive monthly increase. Annual visitor numbers have climbed to 3.48 million – the highest since March 2020 and just 10.9% below pre‑Covid peaks, with a gain of more than 200,000 in the past year.
Slightly more than 75% of the annual increase in visitor numbers has come from Australia, where the 1.5 million visitors are now less than 3% below record highs. Visitor numbers from the Americas, Asia (765,000, still 27% below pre‑COVID), and Europe (446,000, 24% below) have also picked up. Chinese visitor numbers have risen to 255,000 annually but remain 44% below pre‑pandemic peaks.
Smith said, “The inbound tourism sector looks to be humming,” and noted that “the lower NZD is expected to support visitor spending in NZ”. A weaker currency “should support spending by overseas visitors”, adding another source of support for domestic demand as the broader recovery gathers pace.
Read the full ASB report here.
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