Trans-Tasman Emigration and House Prices

New Zealand is a country with a population of only 4 million people - about the same size as Sydney - but with its own currency, fiscal policy and property market. One thing you can never accuse New Zealand property of is being dull.

New Zealand also has one of the world’s most open economies which means that when things are good they are excellent and then there is now, with New Zealand’s economy now officially among the weakest in the world. The normally inflation-rate fixated Reserve Bank has just cut official interest rates even though inflation is likely to hit 5%. Interest rates are just beginning to fall from a high of nearly 11%, the dollar has dropped from A$0.90 to A$0.77 against its biggest trading partner, Australia.

So now, for a New Zealander, Australia is looking like a good town to move to. New Zealanders are a highly mobile population, especially to Australia where any New Zealander has the right live and work indefinitely. Particularly in Queensland - only 3 hours flying time from “home” and with a climate which lives up the advertising moniker of “Queensland, beautiful one day, perfect the next” - that’s appealing to most New Zealanders in July.

So the demand side is all in Australia’s favour: good weather, lots of work and a supply of immigrants from both within Australia and New Zealand. House prices are more expensive in desirable South-East Queensland and Brisbane than New Zealand, but the mining boom and tourism, are pushing up wages too. Especially for lower-skilled employees the Australia’s strong unions mean that wages are lot higher for unskilled jobs than in New Zealand. I would see most of South-East Queensland as long term capital gains territory - especially if they can sort out the infrastructure issues.

Coming off one of the longest sustained “ups” in its history New Zealand’s property values has now stalled big-time. Prices are yet to drop significantly in most parts of New Zealand, as sellers have not yet adjusted their expectations to the new reality. So many properties are now coming onto the rental market as their owners pack up and leave for sunny Australia - leaving the tenants to subsidise the rent, that’s if they can get tenants as, outside of Auckland, there is now some evidence of the start of a rental over-supply.

I’ll leave the last word for Robert Muldoon, a Prime Minister of New Zealand back in the 1970’s and 1980’s who is famously quoted as “every New Zealander moving to Australia raises the IQ of both countries” - Rob was not known for his diplomacy. With the net migration from NZ to Australia the highest for 19 years Rob would be pleased!

Photo Credit: superciliousness