This quote was the headline of a New Zealand Herald article about the Government’s reaction to recent claims that immigration was a major driver of the house price spiral; that it was the reason why unemployment is on the rise; and so on, and so on. It is almost inescapable that immigration will be one of the biggest battlefields upon which the next Election will be fought. On the one hand, cool and calm “business as usual” but masking some determined avoidance of underlying issues (National). On the other, hysteria and xenophobia (Labour and NZ First).
The Net Migration Myth
Take for instance the much-bandied-about figure of 70,000 net inward migration in the past year. Winston Peters and others point to this as evidence that NZ is being swamped with foreigners, and it’s out of control. But Bernard Hickey, also in the Herald, pointed out not long ago:
In all the hullaballoo this week about New Zealand’s record high migration, a strange fact has emerged.
The number of approvals for permanent residence has fallen from more than 50,000 a decade ago to little more than 43,000 in the last full recorded year.
It’s mainly because skilled migrant approvals for permanent residence have fallen from more than 35,000 to fewer than 23,000 in that time.
I pointed this out in a post more than 2 years ago, that Immigration New Zealand has not, in fact, being meeting the NZ Residence Programme target of $45-50,000 p.a. for the last 4 – 5 years.
Then people jump up and down about the large numbers of people coming in on Student and Work Visas. Even Treasury waded in to issue a warning that “record levels of immigration could push New Zealanders out of low skilled jobs, depress wages and increase housing pressures.” It’s not clear how migrants are stealing lots of low skilled jobs from locals. For one thing, under Essential Skills Work Visa Instructions, the less skilled the job which the migrant is applying for, the tougher it is to get approval because INZ starts from the default position that there must be suitable New Zealanders who could do such basic work.
And then, as the Minister of Immigration pointed out in a press statement in June, there are lots of those jobs that Kiwis just don’t want to do. Despite the fact that, as I have said before, it is easier for employers to hire locals than to jump through the hoops of supporting a visa application, they often tell us that they are left with no choice owing to the poor standard of people referred to them by WINZ.
The Auckland Housing Bubble
Yes, everyone else has written about it, so I might as well too. The Opposition parties say it’s a migrant problem. The Minister continues to say it is a supply side problem. Heading toward Election year we have the Government and the Reserve Bank sniping at each other. Last month the Prime Minister told them to “get on with it” in regard to tightening restrictions on lending for property investment.
Amidst all of this the migrant factor is again front and centre. There is now no doubt that offshore purchasers, particularly from China, have had quite an impact on housing values. In response the Government introduced, first of all, a requirement from October 2015 for all non-resident buyers and sellers to record their offshore tax status. This was at least in part a response to accusations that the State had been remiss by not monitoring how many foreigners were buying residential homes. Then, in July, the new Resident Land Withholding Tax rules came into effect to curb the churn of buying and selling by “offshore persons”. We gave a heads-up on this in a blog post from April.
Just to make things interesting, conflicting predictions are now out there about where the market will head in the next few years. On one side, experts predict a building boom will last for another 5 years until supply of new houses finally outstrips a slackening demand. Meanwhile, last week 3 News carried a story that prices would soon take a plunge. Disturbingly, the context of this message was to sound an alarm that investors and retirees should start selling up – and of course, if they followed that advice then it would bring true the prediction of a house price slump. The research body, Infometrics, claimed that building consents would increase by some 39% in the near future, and other factors would conspire to bring about the drop in values, including “falling immigration”.
Sorry? I thought everyone was saying that immigration is going through the roof.
Here’s a way to understand it. Right now, the true cause of high net migration is the numbers of New Zealanders coming home, which more than offsets the historically lower amount of new Resident Visas being issued to migrants. But one day the Kiwis will all have come home. Then we will see the true state of affairs, that in fact the immigration settings are not bringing in enough people with capital, skills or family connections. The relatively static economy will turn stagnant and all the financial indicators will turn red. Perhaps, only then, will the Opposition parties change their tune.