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Downturn In Migration Will Shake Housing Market
Downturn In Migration Will Shake Housing Market
When
looking at my favourite second-tier economic data-point,
net-permanent
migration, it is hard to find any external
support for New Zealand's
faltering housing market.
Annual immigration growth has fallen to a six
year low.
Net-permanent migration for the month of January was just 60
-
with permanent departures of 6,570 and arrivals of
6,630. As previously
noted by JPMorgan, there is a
significant correlation between large swings
in
net-permanent migration and housing market activity
Furthermore, there is a nice correlation with
consumption growth.
The upshot from today's report is that
the downturn in net-permanent
migration will take the rug
out from beneath an already shaky housing
market.
JPMorgan expects house prices in New Zealand to fall 5% in
2008.
Looking to next week's RBNZ monetary policy
statement, the probability of
another tightening in this
cycle has all but diminished - as a result of
the
deteriorating housing market and impact of the drought on
agricultural
production. That said, the deteriorating
outlook for short-to-medium term
inflation will keep the
RBNZ on hold for the remainder of
2008.
ends
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