A significant rebound in the number of New Zealanders leaving for Australia looks unlikely but a slowing in the net inflow of migrants is on the cards, Westpac economist Felix Delbruck says.
The mood in Australia remained deeply downbeat. Although that would change eventually, a renewed exodus of New Zealanders on the scale seen in 2011, when the mining boom was in full swing and quake-shocked Cantabrians were leaving New Zealand, looked remote.
Westpac had assumed the net outflow of New Zealanders would stay low through next year, rising to a more normal 24,000 a year by the end of the decade.
A slowing down in the net inflow of overseas migrants looked more likely, he said.
The number coming in now appeared to be reaching a peak, and with so many on temporary visas, the numbers leaving should start rising soon as their visas expired.
Statistics New Zealand did not break down migrant departures by visa type.
But historically, about a third of foreign migrants - excluding the small number of Australians who did not need a visa - had eventually left and the number of departures spiked after about two years.
''It's difficult to say whether recent migrants' desire to stay will be any different. We'd expect recent work migrants to be more transient but recent international students to be more likely to stay. However, their ability to stay will face a number of constraints over the next few years.''
One of the constraints was the approval process for residence visas, Mr Delbruck said.
The approval process favoured applicants with employment arranged in New Zealand and finding paid work would become harder as the economy slowed.
Also, Immigration New Zealand's residence approval targets had been unchanged at 45,000 to 50,000 a year for more than a decade and were well below the current net inflow of foreign migrants.
The planning targets regulated the pools for expressions of interest in residence applications.
If the net inflow of foreign migrants continued at its current rate of more than 60,000 a year, a growing waiting list of frustrated residence applicants was expected to result, he said.
A second potential constraint was physical. Westpac estimated Auckland had the capacity to provide about 11,000 extra dwellings a year - enough to house an extra 27,000 people a year.
But Auckland's population grew by 34,000 in 2015 and will probably grow even faster this year.
''We see this as unsustainable. The resulting housing shortage will eventually see people leaving, either to other parts of New Zealand or offshore.''
For those reasons, a fairly sharp slowing down in net immigration of foreign citizens was expected over the next few years, probably to about 41,000 a year and consistent with residence approvals maintaining last decade's average of about 45,000 a year.
Assuming Auckland continued to receive a similar share of population growth, the slowing down was also consistent with capacity to build 11,000 houses a year.
Westpac's research implied net migration would remain close to 50,000 next year but slow to less than 15,000 by 2018.
Compared with previous migration falls it would be a soft landing, he said.
Rapid population growth had played a role in alleviating labour shortages.
Compared to the mid-1990s or early 2000s, migration picked up much earlier in the economic cycle this time.
Analysis suggested it was largely due to offshore factors, notably the Australian economic downturn's timing.
The flip side was poor job opportunities overseas would limit how much slowing population growth could help absorb an economic downturn.
That meant rising unemployment.
Mr Delbruck expected the unemployment rate to rise to 6.5% as slower jobs growth combined with rapid population growth.
At a glance
• Net migration has reached record highs thanks to a rising inflow of foreign migrants and a drop in the outflow of New Zealanders.
• Weak offshore labour markets, particularly in Australia, could keep net migration high in New Zealand.
• Strong net migration would help keep unemployment high over the next year.
• Net migration would fall back towards historical averages as the economy cooled, overseas labour markets improved, Auckland's housing shortage worsened and residence approval targets start to bite.
