New RBNZ research reveals a productivity gap with direct implications for borrower serviceability
New Reserve Bank research has confirmed a tension at the heart of New Zealand's housing market: immigration reliably pushes house prices and credit higher but does not deliver the wage growth borrowers need to service those larger mortgages.
The discussion paper — titled Migration and the New Zealand Economy and authored by Naveed Javed, India Power, and Adam Richardson — analysed quarterly New Zealand data from 1992 to 2019, using advanced statistical modelling to separate immigration-driven changes from broader macroeconomic fluctuations. The structural relationships it identifies broadly align with what many economists observed during the 2021–23 migration peak, when record arrivals coincided with sharp house price gains.
House prices, credit, and jobs: the confirmed channels
Immigration shocks produce a significant and persistent fall in the unemployment rate alongside a lift in labour force participation — with younger arrivals aged 15 to 29 having the most pronounced effect on reducing unemployment, and migrants aged 30 to 44 more closely associated with productivity gains.
On housing, the findings are unambiguous: expansionary immigration shocks significantly increase both house prices and household credit, consistent with the demand-side pressure advisers typically observe when net migration runs high.
The immigration cycle this research describes is accelerating again — net migration for the year to March 2026 reached 24,200, up 72% on the same period a year earlier, with the March quarter delivering the strongest quarterly gain since early 2024.
While headline consumer prices were largely unaffected, non-tradable prices — rent and domestic services — rose meaningfully, feeding directly into household budgets and serviceability assessments.
The scale of immigration's influence on the broader economy is also larger than commonly assumed — the research found immigration shocks account for approximately 30% of the variation in both real GDP and the unemployment rate over a three-year horizon, establishing immigration as one of the single most significant drivers of New Zealand's economic cycle.
The productivity gap — the finding brokers should watch most closely
Despite New Zealand's explicit policy focus on attracting highly skilled migrants — and despite immigration rates that rank among the highest in the OECD — the study found large-scale immigration has a statistically insignificant impact on aggregate labour productivity. The implication for borrower serviceability is significant: immigration reliably lifts house prices but does not reliably lift wages, meaning the gap between what clients can afford to borrow and what they need to borrow to enter the market can widen even as the economy absorbs new arrivals.
For brokers, the research draws a clear distinction: demand-side pressure from migration is real and measurable, but the income-side support that would make that demand sustainable is less certain than policymakers have assumed.
For brokers, the research points to a market where demand may return before affordability does — a dynamic worth keeping in mind as migration continues to recover.
For more detail, read the full RBNZ discussion paper.
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