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Why is Auckland growing?

Auckland is growing. In fact, it’s among the fastest-growing places in New Zealand, both in the short term and over the last century. (We must be doing something right!)

But why is Auckland growing? Where are the people coming from? There is a surprising amount of confusion about this issue.

Some people seem to think that Auckland is growing mainly due to immigration, and that if we “turn off the tap” growth would slow down to a more sedate pace. This perception has been fed by historically high levels of net migration to NZ over the last year – even though this has mainly been caused by New Zealanders not moving to Australia:

New Zealand has had a record net gain in migrants of 61,200 in the September year, driven by more Kiwis coming home and fewer leaving for Australia.

The annual gain in migrants has been setting new records for the past 14 months, and there were 118,800 arrivals in the September year and 57,600 departures…

There was also a net gain of 100 migrants from Australia, the sixth month in a row to show a net gain, reflecting weaker economic conditions across the Tasman.

The fall in migrant departures was mainly due to fewer New Zealand citizens leaving for Australia. Departures of Kiwis to Australia fell 15 per cent to 21,500 in the September year, which is less than half the peak departures set in the December 2010 year.

However, when we look at the data, it turns out that migration is not the main cause of Auckland’s rapid population growth. In fact, most of the growth over the last three decades – and most of the forecast growth over the next three decades – comes from “natural increase”. Auckland is growing mainly because Aucklanders are having children.

But don’t just take my word for it – let’s take a look at the data.

I’ve gone to Statistics New Zealand’s surprisingly unusable Infoshare tool and downloaded the following data:

  • annual permanent and long-term international arrivals and departures to the Auckland region (from the International Travel and Migration – ITM category)
  • annual live births for the Auckland region (from the Births – VSB category)
  • annual deaths in the Auckland region (from the Deaths – VSD category).

I used these data series to calculate annual net migration (arrivals – departures) and natural increase (births – deaths) from 1992 to 2015. I’ve ignored a third source of growth – migration between regions – as it’s relatively small. John P has previously taken a good look at that issue. Here’s the chart:

Auckland sources of population growth chart 1992-2015

This graph shows us several important things:

  • First, net migration – those scary red bars – has been really high in some years, but really low (or even negative) in other years. It fluctuates quite a lot.
  • Second, natural increase is much more consistent over time, although it looks like there may have been a bit of a baby boom during the prosperous Clark years.
  • Third, natural increase is almost always larger than net migration. In 18 of the last 24 years, natural increase accounted for a majority of Auckland’s population growth.

Natural increase accounted for 58% of Auckland’s growth over this period, while net migration accounted for the rest. We’re growing mainly because people are having babies. I have yet to see a proposal to turn off the “baby tap” that does not involve violations of people’s privacy and human rights.

In a similar vein, it’s also worth looking at the composition of net migration. Here’s a chart comparing permanent and long-term international arrivals to Auckland with departures from Auckland:

Auckland arrivals and departures 1992-2015 chart

Notice how the two sets of bars tend to move in tandem. When we get an influx of arrivals, we also get a decrease in departures from Auckland. What this means, in practical terms, is that it capping net migration would force us to cut immigration quite severely in a boom time, to compensate for the fact that fewer New Zealanders leave overseas during these periods. This does not seem like a great policy, as it will hamper businesses’ ability to recruit staff at a time when they are expanding fastest.

So that’s the recent past. What might the future look like? According to Stats NZ’s most recent population projections, Aucklanders having babies will continue to account for the majority of the city’s population growth. 62% of Auckland’s population growth over the next three decades is expected to come from natural increase. Here’s the chart. Net migration is running hot right at the moment – ahead of Stats NZ’s medium projections to 2018 – but it will cool off in the future:

Auckland sources of projected population growth 2013-2043 chart

But let’s say, for the sake of argument, that we did succeed in significantly reducing net migration to Auckland. Setting aside the question of whether this would be a good idea – I don’t personally think it would be – we need to ask how much of a difference it would actually make.

So here’s a quick and dirty simulation. I’ve taken Stats NZ’s population projections and reduced projected net migration by 50% – which I think we can all agree is a significant reduction. The results are shown in the following table:

Year Stats NZ medium projection Population projection with half as much net migration
2013 1,493,200 1,493,200
2018 1,646,500 1,606,500
2023 1,767,500 1,707,500
2028 1,890,900 1,810,900
2033 2,010,500 1,910,500
2038 2,123,000 2,003,000
2043 2,229,300 2,089,300
Average annual growth rate 2013-2043 1.34% 1.13%

As you can see, a major reduction in net migration to Auckland would have very little impact on the city’s population growth. Instead of growing to 2.2 million by 2043, it would only grow to… 2.1 million. Furthermore, the city’s projected annual average growth rate would fall to 1.13%, but that is still much faster growth than Stats NZ is picking for other regions.

It’s tempting to think that we could avoid growth pressures by cutting immigration. However, the historical data and population projections suggest that we’d be dealing with substantial growth due to natural increase. Conclusion: it makes much more sense to focus on improving our ability to supply new dwellings.

99 comments to Why is Auckland growing?

  • stu donovan

    When it comes to migration, NZ’s big problem is not people arriving but instead the people who are leaving. And many kiwis have historically left NZ because of our lack of urban culture.

    Even ignoring Europe and just considering Australia, we find that the lucky country has created two of the world’s most spectacularly wonderful cities, namely Sydney and Melbourne, and a couple of decent fast-followers, namely Perth, Brisbane, and Adelaide. These cities continue to attract large numbers of Kiwis.

    At a time when the NZ economy is doing fairly well, and the Australian economy is doing fairly poorly, our net migration gain is *only* 100 people. That’s amazingly low considering that in the bad years we were losing tens of thousands of people per annum across the ditch.

    We should ask ourselves: Aside from natural advantages, such as minerals and good cricket conditions, what is Australia doing right?

    The answer, methinks, is to be found in the Australian cities. Their cities have a scale, an inner-urban density, and by extension levels of productivity and socio-economic activities that Auckland has hitherto not matched. Sydney and Melbourne in particular have wonderful, decent urban cultures.

    My conclusion, based on living in both countries, is that until Auckland allows itself to “grow up” then we will continue to struggle. Nonetheless, there is some hope: In many areas NZ does better than Australia, such as policy and governance.

    • This. Why do people leave a paradise like NZ? Opportunity. Auckland, if we can only get it right in this growth phase, offers the chance to add many of those previously missing opportunities to the NZ scene. That is the great possibility in front of us right now.

      We must grasp this chance to enable Auckland to add a new and different layer to the NZ way of life. Why give our best and brightest away to Australia so meekly?

      This will not do any harm to the great small and wonderful places (like Lyttelton where I am writing this now) that NZ is rightly famous for. In fact it will make living in them more viable and delightful.

      • Stu Donovan

        Lyttleton is fantastic. As are many of the small, beautiful towns around.

        NZ is Auckland’s competitive advantage and vice versa: There’s a symbiotic relationship between the two, because each offers what the other lacks.

        When people overseas asked me what was so good about living in Auckland, I would immediately tell them of how wonderful it was to live in a city with a country as beautiful and diverse as NZ on your doorstep. I’d wax lyrical about hiking in the Marlborough Sounds and swimming in the Far North.

        But none of those beautiful places have populations that are sufficiently large enough to offer the kinds of specialised socio-economic opportunities that can be found in Auckland, and which sustain and motivate people like me on a day-to-day basis.

        Then one day I came to the realisation that I wouldn’t live in Auckland if it wasn’t for New Zealand, and I wouldn’t live in New Zealand if it wasn’t for Auckland. Not because they’re the same, but because they’re oh so different.

        Quite profound really. I only wish central government policy-makers grasped that distinction. That while the rest of the country depends on good roads, Auckland city will increasingly depend on public transport and walking/cycling. That while the rest of the country depends an efficient agricultural sector, Auckland depends on a diverse and innovative services sector – applying NZ’s relatively high levels of human capital to solve problems home and away.

        • Brendon Harre

          I know this article is about Auckland and I completely agree with Stu that Auckland as a international sized city is a huge economic opportunity for NZ. As a country we should be assisting the economic agglomeration process that in return will help us all. But can I make a case for a little positive support for Christchurch too. Over the next 40 years Christchurch could become NZ’s second international size city -a small but dynamic version of say Adelaide. This would help balance out NZ. With some decent public investment in areas like public transport -in particular restarting the passenger rail network -urban life would return to the CBD and well connected periphery nodes -like Lyttleton where Patrick is today.

          • Peter Nunns

            I got curious so I took a look at the same data for Canterbury. Here’s the chart: http://transportblog.co.nz/wp-content/uploads/2015/11/Canterbury-sources-of-population-growth-chart-1992-2015.jpg

            Seems to show a broadly similar pattern, except that there are larger net outflows when migration slumps. As a result a larger share of growth over the last generation has come from natural increase – 66%. Also notice the small crash in natural increase post-earthquake. Deaths rose in 2011 and stayed slightly elevated for two years, while births were depressed during 2012-14.

            I’d suggest that a key priority for Christchurch is figuring out what it can do to minimise the magnitude of net outflows during bad years.

          • Brendon Harre

            Well Peter we cannot do much about earthquakes causing a temporary peak of ‘out’ migration. Although that seems to have rebounded quite quickly.

            The earlier periods of ‘out’ migration around the turn of the millennium is more concerning. For me I think that Christchurch/Canterbury is uniquely vulnerable to economic downturns and poor policy responses.

            Other centres are either partially protected because they are either the public sector capital -Wellington, private sector capital -Auckland, a varsity town – Dunedin, Palmy or a small provincial centre. Christchurch as a diversified mid-size commercial city is reliant on conditions being such that this diversified economy is strong.

            In my opinion if NZ developed a post farming economy based around a diversified urban economy of agglomeration, affordable housing, good transport provision, attractive amenities for skilled workers and business etc, that is often discussed here on tranportblog, then Christchurch would be the biggest winner.

          • Peter Nunns

            Good analysis Brendon – that rings true to me. The sense I get when I go to Christchurch is that the city doesn’t quite know what it wants to be. Is it a big farm supply town, or is it a diversified urban economy? There’s elements of both.

            Send us a guest post if you’d like to give the question a bit of a broader airing!

          • Brendon Harre

            I think if Canterbury was given a chance to express itself then it would choose Christchurch becoming a diversified urban economy. Unfortunately we are not given that opportunity. Ecan is not democratic and is focused on irrigating the rural economy. The rebuild has been very much a top-down affair, with pretty much everything run through the Earthquake Recovery Ministers office/person. Gerry Brownlee quickly quashed local expressions of Christchurch becoming a dynamic urban environment with good amenity values, from the likes of “Share an Idea” process. Historically Canterbury has been underfunded in transport provision -indicating a neglectful attitude from Central government agencies such as NZTA. Nationwide private institutions such as media companies similarly give little attention to Canterbury -a study showed TV images of Christchurch could be measured in minutes per week, versus hours per week for Auckland. The only weird thing is why the locals vote for their abusers. Although that may change once the opposition stops infighting and provides a viable alternative.

      • Early Commuter

        Hi Patrick
        Surely our “best and brightest” are the sort of people who wouldn’t flutter across the ditch for a few extra shekels, but would stay in NZ to build a better country?
        Part of “best” includes values and values include loyalty.

        Say not what your country can do for you…

        • Surely our “best and brightest” are the sort of people who wouldn’t flutter across the ditch for a few extra shekels, but would stay in NZ to build a better country?
          Part of “best” includes values and values include loyalty

          By the same token bright kiwi kids should probably stay in Westport and work in the local fish and chip shop rather than move to Auckland to work in the professions? Why is the kid abandoning his community for a few extra shekels to work in the big smoke?

          Sorry Mr Early but if you want to see what happens to a community where all the bright kids leave except the “Loyal” ones then there are plenty of examples of those around NZ (and the rest of the world).

          • mfwic

            Muldoon claimed that the people leaving NZ to move to Australia were raising the average IQ of both countries.

        • ‘Surely our “best and brightest” are the sort of people who wouldn’t flutter across the ditch for a few extra shekels, but would stay in NZ to build a better country?
          Part of “best” includes values and values include loyalty.’

          Cute theory, kid yourself with that if you like, but even the most cursory glance at the global history of migration suggests that many with gumption and ambition don’t put abstract notions like patriotism or loyalty above self betterment. Anyway it is easy to convince yourself that you’ll return with new skills, or even dosh, to help out kith and kin at home, and many do… nah mate, one of the problems with being a talent provider for the rest of the world, like Ireland and New Zealand, is that those that stay are over represented by two groups; the uselessly unmotivated, and the entrenched wealthy; those favoured by the current system. Both these groups are not the best for a nation. The former for obvious reasons, and the later because they put their energy into maintaining and expanding their special advantages.

          An example of the later recently are those that see their interests entirely invested in crazy residential property prices; resisting reform at every level of society from tax reform, eg CGT, to planning regulation improvement.

        • Nick R

          Loyalty and patriotism has to be earned, a country needs to give those best and brightest a reason to be loyal.

          Loyalty without reason is just blind nationalism. You get a lot of that out of parts of Australia’s population, have a look at the recent anti-immigration whites only demonstrations. Loyal yes, best and brightest? Err… No.

      • Danx

        So how much does being a great city depend, from your point of view, on sheer scale? Is there a point at which you’d say NZ should aim for a lower net immigration?

    • Peter Nunns

      Stu, why don’t you take these great comments and put them straight into a post where they can be seen more widely?

    • Angus Robertson

      Australian cities also have extensive spread, away from their respective harbours and river ports. Urban intensification and the suburban sprawl compliment each other.

      • Stu Donovan

        completely agree, both with your observation and also with your conclusion. Worth remembering, however, that Australia has subsidised sprawl even more so than NZ. In saying that I support peripheral urban growth, provided the public costs and externalities are priced/managed appropriately.

        • Yes, however we have had 60 years of near total investment of suburban sprawl and massive roading. So in order to get to this balanced state; this city of up and out, of driving and riding, we now must concentrate on the missing density and transit infrastructure. And in a way that may seem disproportionate, but is in reality just to achieve a health balance.

          Both Melbourne and Sydney were able to maintain their city centres on legacy Victorian and Edwardian rail systems, just updated enough, especially with the underground city loops, in each case. They now both need to spend big to grow these networks, the happy inheritance is bursting in both cities. Auckland is more like Perth in that it flirted with total abandonment of this legacy as they were too incomplete to look viable; so investment is required to build scale and utility first. Has worked in Perth, is working in Auckland.

  • Dion

    Thanks Peter, such an informative post, especially the end bit.

    Looking at the charts, I can’t help but see there was a significant decrease in departures in 2002, I’m guessing in part due to the changes to laws in Australia made by the Howard government in 2001.

  • may have been a bit of a baby boom during the prosperous Clark years

    A little wishfull there. More like the prosperous Peter Fraser years 🙂

    “The ‘baby blip’, which saw the fertility rate peak at 2.19 in 2008, is seen by demographers as a faint echo of another upward blip around 1990, which represented babies being born to the children of the great post-war baby boom in which the fertility rate peaked at 4.31 births per woman in 1961. ”

    http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=11403961

  • Warren S

    Projected population growth for Auckland – wow ! – Methinks the Government better get the CRL started and finished as soon as possible so we can build some apartments along the transit lines (i.e. brownfield development) and maybe slow down building all over our golf courses !!

  • Steve Withers

    I lived in the Wellington and Kapiti areas for over 20 years. Eventually, I drifted north to take advantage of the better climate, more numerous public amenities, ease of access to NZ’s main airport…and enjoy the benefits of life in the big city. I suspect I’m not alone. I would move even further north but for the fact it would make me entirely reliant on a car I eventually – fingers crossed – will be too old to drive. Nope. Auckland is warmer and provides support for one’s whole life…not just the bit where you’re young, fit and can drive.

    • luke

      weather is subjective. in my opinion Aucklands weather was not all that spectacular. London’s westher comes in for a lot of stick but I think it has a great climate compared to Auckland.

      • Stu Donovan

        you’re entitled to your opinion of course, but as a fellow resident of western Europe I would suggest that, in my experience, the climate is shit compared to Auckland. When people ask, I liken it to living in a cloud. Some parts of the cloud are nicer than others, but it’s still a dark damp cloud. London is one of my least favourite climates; I actually prefer the wind of Amsterdam because at least it keeps the rain clouds moving. Anyway, I’m glad you enjoy it!

        • Sanctuary

          “weather is subjective. in my opinion Aucklands weather was not all that spectacular. London’s westher comes in for a lot of stick but I think it has a great climate compared to Auckland.”

          As a pwerson who grew up in Napier, now resident in Auckland and who lived in London for a long time, I can tell you Auckland and London both have equally shit weather, each in its own awful way. If you want good weather, move to Hawkes Bay where the summers are reliably long, dry and hot and winters are cold and clear and the frost gloriously crisp.

      • “weather is subjective. in my opinion Aucklands weather was not all that spectacular. London’s westher comes in for a lot of stick but I think it has a great climate compared to Auckland.”

        All the ex-Londoners I’ve met in Auckland think the opposite – that Auckland’s weather is definitely an improvement over London.

        But them being Brits & all, maybe they were just being polite. XD

        • Stephen Davis

          Well, they are specifically those Brits who chose to come to Auckland, so they’re hardly a fair sample.

          That said, I’ve been to London and the weather has always been crap.

        • Bruce

          Auckland gets a lot more rain than London and is windier. London however is overcast more and in winter it has very short days (wonderful in Summer though).

          • Sailor Boy

            London is about 10 degrees colder over winter and has far more days with rain, far more days of consecutive rain, far more rain hours and far more days with ow visibility. Better climate my eye.

          • Bruce

            @Sailor Boy. Auckland has over 1200mm of rainfall pa. London has less than half of this at 594mm pa on average. Sure it is colder in winter no one said it wasn’t. In the context of cycling it has much more reliable/pleasant weather as it is less likely to rain and isn’t as windy.

          • SDW

            @Bruce – yes Auckland gets more rain, but that due to intensity. We have lots of short heavy showers (presumably due to the more “sub-tropical” nautre of Auckland’s climate. When it rains in London, it doesnt seem to heavy but does drag on, then the clouds still linger. I’d take short and sharp followed by some sunshine anyday. Also, the 7 hours of daylight in winter is a big bummer in London.

      • Steve Withers

        London has great weather? I was there for two months this year (July and August – the height of summer) and I have to say…..respectfully…..your memory fails you. 🙂

        • Bruce

          Many sunny days from 4am through to 10pm in the height of summer. Great for an evening drink in the park with friends in 25-30° temps

          • Stu Donovan

            yeah I tend to agree with Bruce – the summer in Europe is fabulous. Long summer days, so great to enjoy a beer in the city. But for me the winter is too long and too dark, while the skiers are too overcast.

            I’d rather Auckland’s erratic weather, alternating bright blue and dark blue, than living in a dark, damp cloud.

  • mfwic

    Peter the data looks great but I am marking your analysis as ‘could do better’! The first graph shows the extent of the problem. The housing market is slow to respond to changes in demand so we get periods of rapid price increases. It isn’t people having babies that causes that as that demand takes 20 to 30 years to impact prices. The issue we face is that net migration is currently not managed so we get 5000 in 2013 and 17000 the following year. No wonder we have overcrowding and homelessness and all of the problems that creates. It would be a simple matter to let in an equal number to the number that left last year so the spikes wouldn’t be eliminated but they would be smoothed.

    • Stu Donovan

      net migration is managed. It’s just volatile and hard to predict.

      You’re deluding yourself if you think anyone can predict those positive spikes. No one did.

      I remember reading an NZIER paper on migration in 2010 which warned of NZ’s impending doom due to an accelerating exodus to Australia. Fast forward and their predictions were completely inaccurate.

      Funnily enough I don’t think it’s because they were stupid people, or that their models were wrong. Their models could well have been right on the money if the predicted economic growth rates in each country had manifested as planned. But they didn’t.

      So my challenge to you is: Predict how many visas NZ should approve for 2017? Migration is, after all, a long term decision and many of the people migrating here now made the decision more than 12 months ago. Tell me how many people we should allow in in one year’s time to keep the economy at its optimal level.

      Or alternatively tell me how we could grant visa 12-24 months ago and then veto them once a housing bubble emerges? That’s going to go down real well with potential immigrants. Imagine the conversation: Hey your visa’s been approved, and is valid for 5 years, but get back to us in 6-12 months time when you’re planning to move over and we’ll let you know if it’s OK.

      I feel like a lot of armchair experts speculate on how to “manage” migration without actually thinking it through.

      • mfwic

        I am not suggesting predicting outflow and matching that. I am suggesting matching this year’s inflow to last year’s outflow. Use the lagged data. There will still be spikes but the moving average would be flat. At the moment there is no connection at all.

        • Stu Donovan

          did you consider that the difference may be due to variations in the number of approved visas that are acted on rather than the number of visa approved?

          I.e. the conversion rate is important. It may be (I don’t know) that INZ approved similar numbers of visas over time, with the difference in numbers primarily down to differences in the number of people who end up moving here, i.e. something that is beyond our control.

          Now moving away from hypotheticals: The surge in net migration recently is due to student visas from India and China.

          These people don’t tend to buy houses. That’s been shown time and time again. They rent. And they rent small. The additional pressure they place on the housing stock is limited, methinks.

          If your primary problem with immigration is its effects on house prices, then you need to accept that it’s orders of magnitude less important than other poliy drivers. Like elasticity of supply and lending criteria.

          • Bruce

            Surveys have been conducted that show the majority of Indians on Student Visas only did so as a way to gain entry and to then apply for permanent residency later. It’s a sham!

          • Peter Nunns

            Citations please?

            In any case, if somebody wants to come here, pay international student fees to learn useful skills, and then apply for permanent residency under points-based migration policies, what’s the problem? They’re following the laws and making a useful economic contribution in the process.

          • @Bruce
            “Surveys have been conducted that show the majority of Indians on Student Visas only did so as a way to gain entry and to then apply for permanent residency later. It’s a sham!”

            I am a panel doctor for Immigration Medicals so I clarify this more for you.

            Graduating here as an international student can only lead you to a 1-year job search visa here in NZ. After that you can only legally stay in NZ if you have an ongoing job and your employer is happy to act as an ongoing sponsor for you.

            As you can see there is no ‘sham’ involved here.

          • Bruce

            @Thomas: exactly. Arrive here on a student visa. Work for minimum wage (or less) in a restaurant etc, get sponsored by the restaurant etc and then wham bam thank you ma’am permanent residency. Piece of cake. The system is a sham.

    • Peter Nunns

      Smoothing out net migration would be hard – people flow in and out of the country in response to macroeconomic factors rather than policy factors. I suppose you could put a cap in place, but then that opens up the potential for arbitrary or distortionary outcomes. It would mean accepting one firm’s request to hire an overseas staff, but rejecting another because it was mailed in a week later.

      And it still wouldn’t do anything about the fact that roughly half of the variation is caused by _New Zealanders_ choosing to leave at faster or slower rates.

      That being said, you’re right to say that spikes in demand can cause issues when housing supply is slow to respond. That’s an issue I touched on here and here. I would argue that the appropriate policy response is to raise the elasticity of supply.

      • mfwic

        It would be hard but it is the easiest option. We cant stop people breeding and we can’t stop people leaving, but we can stop people coming in. We do already using a weird system of points and adjusting that up or down to suit the incumbent Government. It wouldn’t matter to most if there was a cap set based on last years outflow and the points system raised or lowered to achieve that. As for firms applying – so what if they can’t get people this year, they can put up their wages as required by the market or as a very last resort even actually train someone. Maybe that is going too far for NZ business.

        • Peter Nunns

          We need to sort out housing supply to address current overcrowding / homelessness issues and ensure that we can house Aucklanders’ children. That is an absolute necessity even if we change migration policy. The last section of the post should have made that pretty clear.

          Basically, more flexible housing supply is good, so we should do that anyway. And if housing supply is more flexible, then the problems associated with volatile net migration will be considerably abated.

          • mfwic

            I agree totally. But I would add that we should also try to manage the part of demand that we could manage rather than hoping our supply will catch up because I have no confidence in Auckland Council and Auckland Transport in particular ever allowing that to happen. We have the bizarre situation where the Government and Auckland Council sign an accord but Auckland Transport actively tries to stymie growth in housing.

          • Stu Donovan

            I think what you’re proposing is largely unworkable, or at least highly undesirable.

            Let’s say that in a given year we specify a cap on visas of 50,000, and leave exiting criteria unchanged. Then imagine then that macroeconomic conditions turn in our favour. Applications surge, and we meet that cap in 6 months, largely from student visas who are quick to respond.

            What do we do for the next 6 months? Reject everyone? Even highly skilled economists? And traffic engineers? Or do we accept only people with honourable surnames like Parlane?

            Even if not unworkable, it would be extremely undesirable methinks.

          • Peter Nunns

            Glad we agree on the dynamics! I think our disagreements arise from different perceptions of the ease of changing policy and the unintended consequences of doing so. I’m more optimistic than you about our ability to sort out housing supply – I’ve got a post scheduled for next week explaining why – and more pessimistic about the impact of tightening migration settings.

          • mfwic

            Firstly Stu they shouldn’t let any traffic engineers in, those we have deserve much higher salaries so lets cap there numbers for a start. But more seriously temporary student visas dont need to be mixed up with immigrants. They are temporary- let them find a place in the quota if they choose to stay. Thirdly yes cap the numbers each year and work out an allocation system for places in that quota. Maybe use the market and let people bid for them in an auction, if employers value the person they will help pay. Then each year cap to match last years outflow or last years outflow plus whatever number we can house/employ/fit.

          • Stu Donovan

            I agree. Let’s split out the student visas: Then we don’t have a problem? From a quick eye-balling of the data the number of PLT arrivals *excluding student visas* this year is more or less the same as previous years.

            I think you specified a solution that is in search of a problem ;).

          • mfwic

            I think this could be an efficient solution and a way to raise money. Give discount vouchers to applicants with skills you want and bigger discounts to younger people and invite them to bid in a Dutch auction every 3 months. Start at $1million and decrease the price until all the residency places are filled. We would get the skilled people we want and those who value living here the most as well as a good way to earn the Government some money.

        • Stu Donovan

          can you outline what the problem is you’re trying to solve? I feel like you’ve jumped to policy solutions without specifying what the issue is.

          And before you say “high house prices” can I just point out that the latest spike in arrivals is driven by student visas? And the evidence shows these immigrants do not tend to purchase houses.

          • Lindsey

            I am not so sure about that. Yes, the CBD apartments are full of foreign students. However, there is also a bunch of families for whom having a student here is an opportunity to invest in an Auckland property. It is family money, channelled through the student and the house may or may not be occupied by the student (plus a grandparent or two to do the housework and the garden).

          • Stu Donovan

            I’m as *sure* as you can be based on the research I have read (feel free to link me to research you know of):

            “The dwelling tenure of migrant households varies depending on their length of residence in New Zealand. For example, migrant couples who have lived less than five years in New Zealand are more likely to rent, than migrant couples who have lived more than 15 years in this country. Home ownership rates among these earlier migrants are similar to those for NZ-born households, at 77.0% in 2006. In Auckland, overall home ownership rates are lower than for the country as a whole (58.1% compared with 62.7%). While most people still live in their own homes, the proportion renting from the private sector has increased in recent years This is particularly so among the migrant couple and single migrant household categories.

            Source: http://www.mbie.govt.nz/publications-research/research/migrants—economic-impacts/the-economic-impact-immigration-on-housing-in-nz-1991-2016.pdf

          • Stu Donovan

            P.s. This research by the RBNZ found that arrivals from Asia tend to have a smaller impact on housing prices than arrivals from other the UK/Europe:
            http://www.rbnz.govt.nz/research_and_publications/analytical_notes/2013/an2013_10.pdf

            See page 13.

  • Stu Donovan

    For anyone who’s interested, here’s some analysis from MBIE that questioned impact of immigration on long run house prices (pg 75):

    Our bases for questioning the causality between immigration and house prices are as follows:
    1. Some decades of observation and analysis of the New Zealand economy and migration has indicated to us that when real incomes are increasing in New Zealand, immigration is strong. When real incomes are increasing we would expect real house prices also to increase.
    2. The Reserve Bank paper itself expresses some disbelief as to the magnitude of the impact of immigration on house prices. This could indicate that at least some of the house price increase has been caused by an omitted variable that itself is correlated with immigration.
    3. The Reserve Bank paper also in analysing separately the 2001 to 2006 migration and housing boom noted that ‘the estimated relationship between migration flows and housing prices is weaker when a more comprehensive measure of incomes (real GDP) is included in the vector autoregression in place of the unemployment rate.’ We make two comments on this observation. Firstly, in this period we would have thought the unemployment rate a particularly inappropriate measure of incomes, given that the main change in the labour market has been a very major increase in supply of labour (by 257,000 or 13.2%) over the period, partly due to increases in participation rates from 65.9% to 68.8% of the labour force. Employment increased by 272,000 over the same period, or 14.8% which will have driven strong income increases. Secondly, the fact that the estimated relationship between migration flows and housing prices is weaker when real GDP is included in the specification of the model could indicate that there is a need to explore further the causality between GDP, migration flows and housing prices.

    Report available here: http://www.mbie.govt.nz/publications-research/research/migrants—economic-impacts/the-economic-impact-immigration-on-housing-in-nz-1991-2016.pdf

  • Early Commuter

    Hi Peter

    If an immigrant comes in year X, and then has a child in year X+1, is the child “natural increase” or “migration”

    Because if it’s “natural increase” there’s a systematic undercounting of the impact of immigration

    • Peter Nunns

      Yeah, that’s right. That’s why I caveated the calculations in the table as “quick and dirty”. If you wanted to account for births to migrants, you’d probably have to knock another 50,000-100,000 off the 2043 totals. However, that still takes us to a population of 2 million by 2043.

      My intuition is that migration is an event that temporarily *lowers* people’s fertility rates. That’s because it takes a while to establish yourself in a new country – home, work, networks, etc – which can distract from babymaking. Anecdotally, friends and acquaintances who have migrated to NZ and then had children tend to do so with a lag of 5 years or so, even if they already have a child.

      • Early Commuter

        It’s why companies love one-off bonuses not pay rises! No year+1 issues 🙂

        Not knocking your numbers, there’s no way of solving it unless we set a start date of X and assume all migrants and children of migrants after that date aren’t “natural increase”

        My 2c is that we should regard immigration as a privilege, not a right; there’s no human right involved. So we should be absolutely sure that the benefits outweigh the costs for all immigration (ignoring refugees, who we should take more of on humanitarian grounds).

        • Totally agree that immigration is not a ‘right’ issue – even immigrants like me know that the reason I get to settle & work here is because there is a shortage of skills which I can fulfill, for which I’m thankful.

          But many of us have an issue with saying we need to take more refugees but limit immigration (ala Winston Peters) – here I am with skills that I can offer for the community, & yet I am put aside for another person who may or may not have anything to contribute to the community (or worse, terrorize the local community ala the Sydney cafe siege). It almost feels like cheating.

          • Peter Nunns

            I don’t like framing migration as an “us versus them” issue – e.g. “real New Zealanders” vs migrants, or refugees vs skill-based migrants. As you said, that feeds the politics of division.

            I would also strongly caution you against conflating refugees / asylum seekers with violent crime / terrorism. The overwhelming majority of refugees are law-abiding people fleeing from the threat of violence. And in the US at least, home-grown criminals have accounted for the majority of domestic terrorism since 9/11.

          • I am not a fan of ‘us & them’ either – I think we have room for both migrants and refugees here. Neither am I equating refugees with terrorists. Just want to express my unhappiness about this ongoing insistence on limiting migration while increasing refugee quota.

          • Peter Nunns

            My apologies Thomas – I was agreeing with your point rather than telling you off! Carry on…

          • Nick

            Yes I agree. It is ridiculous to take an us and them view of immigrants in New Zealand, of all countries. We are pretty much unique in that unlike just about any country I can think of, 800 years ago there was nobody here at all. Whereas in most places there were indigenous peoples for many thousands of years. We are all immigrants.

            Unfortunately that fact carries a certain political and cultural sensitivity so it tends not to be mentioned. Which is a shame, because to me it carries a really powerful message, particularly from an environmental perspective. i.e. it’s our wildlife and natural environment that is indigenous, we are all just recent arrivals on our various waka. So let’s tread lightly.

          • Peter Nunns

            Nick – great perspective on things; I fully agree. New Zealand’s a unique place in a lot of ways, both environmentally and culturally. That’s one of the reasons that I think that good urban policy is vital for NZ. Better cities would complement what’s good about our culture – innovation and openness to new ideas and people – while minimising our environmental footprint.

          • Sailor Boy

            That is a particularly insensitive way to talk about refugees!

            Refugees come here because they are likely to die or be tortured where they were. They therefore have far more of a right to come than you or I regardless of what we can contribute.

  • Bruce

    100,000 less people would mean there would be a requirement for 30,000 less homes. I wouldn’t call that insignificant! At current rates that is more than 3 years construction. You also conveniently forget that a lot of the natural growth is actually from migrants that have previously moved here having kids which is pushing that natural growth rate higher

    • Bruce

      Although in the comments section I do see you mention it with 50-100,000. I’d say at least 100,000. So 100,000 immigrants + another 100,000 offspring means 200,000 less or 60,000 homes (and around 100,000 cars).

      • Peter Nunns

        I’d tend to pick a number closer to the middle of that range, for three reasons:
        1. From 1992-2015, roughly 18% of permanent/long term arrivals were over 40 and thus not very likely to have more kids.
        2. From 1992-2015, roughly 17% of permanent/long term arrivals were under 15 and hence not very likely to have kids immediately upon arrival.
        3. The remaining 65%, who are in or close to their childbearing years, are likely to delay having kids for a few years after arrival.

        But even if we adopt your high assumptions, Auckland’s still going to grow to 2 million by the 2040s. We’re going to have to accommodate a lot more people regardless of what we do with migration policy. It makes sense to focus on sorting out housing supply and transport infrastructure/service provision rather than fantasising that we could slash migration as a substitute.

        • Scott M

          “Fantasising“ – what people have rightly pointed out is that migration creates peaks and troughs – which is the problem.

          Mwfic‘s proposal is entirely possible – set a cap and review it annually to ensure a smooth increase of 10,000 or whatever is deemed aligned with housing supply.

          We have a serious housing problem in Auckland and yet Stu and yourself consistently oppose the obvious solution. Apparently you consider the welfare of migrants is more important than those who already live here.

          • Peter Nunns

            “We have a serious housing problem in Auckland and yet Stu and yourself consistently oppose the obvious solution.”

            No. You need to look at the data, which I have helpfully summarised for you in this post. Cutting net migration is not actually a solution to Auckland’s long-run housing problems, because the population would still be growing rapidly from natural increase. The most appropriate solution in this context is to make it easier to supply new housing (and to increase construction sector productivity).

            “Apparently you consider the welfare of migrants is more important than those who already live here.”

            Personally, I value people’s wellbeing equally regardless of what colour their skin or passport is. But that’s beside the point, which is that clamping down on migration doesn’t address the underlying problem – inelastic supply of housing – but would have other negative consequences. (E.G. making it more difficult for firms to recruit staff when the economy’s booming.)

          • Scott M

            Inelasticity of supply and yet you dont want to address demand. Interesting.

            We should be talking about the SHORT term problems, the deficit of 30 – 40,000 houses we have now which is not assisted by uncontrolled migration. I couldnt give a stuff about what may happen in 2043, when need to be focussed on the problem we most certainly have now!

          • Peter Nunns

            “We should be talking about the SHORT term problems, the deficit of 30 – 40,000 houses we have now”

            In that case, I have a brilliant solution: Round up about 100,000 people who current live in Auckland and march them south at gunpoint. Problem solved! No more housing shortfall! I’ll make sure your name’s on the list for forcible relocation.

          • Scott M

            Interesting how someone who claims to be a researched/objective person cant seem to talk about immigration without getting emotional.

            Stopping immigration, other than the absolute necessities in the short term is entirely possible. It just doesn’t suit your POLITICS.

          • Peter Nunns

            Immigration is an emotional / political topic for a lot of people. For example, some people oppose immigration because they don’t like people with different skin colours, languages, or religions and don’t want to live near them. I hope that those people change their minds – after all, we’re all the same beneath the skin.

            As I’ve previously written, I’m in favour of immigration because I’m grateful for the opportunities it’s given me and my family and I want other people to be able to share those opportunities. Fundamentally, this is an empathetic response. When I see news stories about Syrian refugees desperately trying to escape from a brutal war, I identify with them. If I’d been born in Syria I’d be trying to do the same thing right now, and wishing that more people in Western countries were speaking up to give me a fair go.

            But setting aside my foolish emotions, as an economist I would observe that heavy-handed policies to control demand usually do more harm than god – hence the reference to Stalinist population relocation strategies – while policies to improve the efficiency of supply or increase choice are generally beneficial.

          • Peter Nunns

            As an aside, several of your comments have strayed close to ad hominem – i.e. playing the man, not the ball. You started out with the emotive – not to mention thoroughly unsubstantiated – comment that I “consider the welfare of migrants is more important than those who already live here”, and followed up by stating that I only disagree with you due to my “POLITICS”. These kinds of comments are discouraged by user guideline 3 as they add nothing to the conversation.

            Meanwhile, your only engagement with the evidence presented in the post was your statement that you “couldnt give a stuff about what may happen in 2043”. This, again, is poor conduct and discouraged by user guideline 5. Please reflect on the guidelines before commenting again.

          • Scott M

            Peter – you have put forward a hypothesis that people need not focus on demand side issues to housing demand as in the longterm it doesnt make much difference to overall population numbers. I would put to you that this is a red herring.

            As your graph points out, natural growth is slow and steady, whereas migration peaks and flows. The peaks have a large impact on house prices given the lead in times to build houses. Hence my view to you is we should do whatever it takes to ensure population grow is steady. That is a demand side issue.

            But hey threaten me with the user guidelines rather than engaging in any counter arguments put to you.

  • People who are all about “immigration is a privilege, not a right”, don’t tend to like it when the boot is on the other foot and Kiwis are discriminated against in Australia (sometimes put in offshore gulags). What drives me wild is the level of “freedom for me but not for thee” that such people want.

    • Peter Nunns

      Fully agreed. For what it’s worth I drafted a very angry post about Australia’s shameful deportation policies last week, but I’m not sure it’ll get posted as it’s probably a bit too far off-topic for Transportblog.

    • Tony

      It seems little known that New Zealanders have the exact same rights as any other nationality in regards to immigration into Australia.

      It is the Special Category _Visa_ (as any entry visa) that can be revoked at any time.

      Viewed that way, the ability to live and work in Australia on an automatically issued visa on arrival could be seen as a privilege.

      If you want to become an Australian citizen then apply like any other nationality.

      • Konradk

        I don’t think that’s the problem – it’s that Australians moving to New Zealand have a far better deal than NZers moving to Australia. It’s not a relationship of equals, in other words. I love it here in Melbourne, but it does piss me off that I don’t have same social security net that Australians who move to New Zealand have. I have two jobs, I coach cricket, and I enthusiastically contribute to the local entertainment and arts community. I don’t want to mooch. If Australia wanted to ensure Kiwis are ‘lifters, not leaners’, they could easily enact legislation that makes it harder but not impossible for Kiwis to gain Citizenship the same way Aussies can in New Zealand. But they don’t, because of an ignorant (vaguely racist) belief that New Zealand will export its great unwashed if they let the floodgates open.

        • Tony

          That’s quit reasonable and I’d agree. But that is separate to the ‘put in offshore gulags’ and ‘deportation policies’ situation.

          Out of curiosity, have you tried applying for residency?

          • Sailor Boy

            Australia imprisons any foreign Nationals they intend to deport in offshore prisons known for their human rights abuses, subjected to a recent law making it a crime to report any human rights abuses that do occur there. Sounds like a gulag to me.

      • harrymc

        It is virtually impossible to get Oz citizenship if one is over 45; that would apply to quite a number of Kiwis.
        Also it costs heaps! AUD$1700 up front with more to come. $3,000 approximately.

      • Angus Robertson

        Sort of, Kiwis get a special category visa with no expiry date – this makes it very different to everyone else. It means we can settle into longterm employment and have a family in Australia.

        To become resident or citizen of Aussie a person needs to be rich or highly skilled or a refugee fleeing oppression. Kiwis won’t qualify working normal jobs with normal wages.

        We’d like a route to citizenship that considered our time working in normal Australia to be worth something.

    • Peter Nunns

      No data, no references to research papers, no testable hypotheses… all this article proves is that its author hasn’t bothered to research the topic before spouting off.

  • “We must be doing something right!”

    Why is growth a sign of doing something right? On the contrary, the cost of everything rises with growth, and perpetual growth is unsustainable.

    If humanity and life on Earth is to survive long term, growth of human activity must be halted. Growth is ultimately a process of destruction.

    • stu donovan

      In this context we’re talking about relative growth, i.e. NZ’s population is growing, while other places are not (or at least growing less) because people are moving from there to here. Migration is not “growth” when considered in a global context, but instead simply a transfer of people.

  • jezza

    Great article Peter! Do you know if the stats drill down to the level of whether the migrants are first time to New Zealand, or NZers returning from overseas (mainly Australia)? I think this would paint an interesting picture.

    • Peter Nunns

      Thanks! The Infoshare series allow you to break down arrivals and departures by country of previous residence and citizenship. Click on the “Tourism” folder and then the “International Travel and Migration – ITM” sub-folder to see the full list of datasets.

      From 1992-2015, roughly 25% of the permanent/long term arrivals in Auckland were returning NZ citizens. However, the total number of returning Kiwis tends to be much less volatile than other categories of arrivals and departures – i.e. it doesn’t swing up and down so wildly.

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