New Zealand welcomed 7500 people to its shores in March who are intending to stay permanently or at least long term. This is up from 4700 in March 2008.

Seasonally adjusted, 1700 more people arrived than left last month.

It is logical to think that the rush of new and returning residents combined with the increased number of Kiwis staying put (1000 fewer departed in March 2009 than March 2008) put pressure on the housing market.

Certainly they will all need somewhere to live. The buyer pool will be boosted and rental properties will have more tenants scrambling to get in the door.

But National Bank chief economist Cameron Bagrie suspects that the impact of increased migration won’t reach the housing market until 2010.

“While of course the absolute number of bodies arriving or leaving the country is important from a housing demand perspective, the amount of money or capital they bring (take) with them is also very important,” Mr Bagrie says.

In a monthly National Bank property report, Mr Bagrie says to keep in mind that migration has not been the driving force behind the ups and downs of the property market recently.

A disconnect between housing and migration occurred between 2004 and 2007 as other market factors came in to play.

“Annual net migration has been below 15,000 since the start of 2005 yet house prices are still 30% higher relative to then – and this includes the fact that real prices have fallen around 11% from their peak,” Mr Bagrie says.

“It is therefore clear that something else was going on and we suspect it is the credit nature of the upturn, and then the downturn, that is playing a key role. Behavioural aspects to the cycle also cannot be discounted as the “house prices only go up” mantra led to a significant amount of exuberance.”

The current economic climate means that the flow of migration in and out of New Zealand is different from previous times of financial crisis.

“Historically,migration flows have tended to deteriorate during times of economic weakness or rising unemployment. In that situation it is only natural to pack your bags and look overseas as was the case over the 1980s,” Mr Bagrie says.

“This economic cycle is also different. It’s a deep global downturn. New Zealand is suffering, but looks better than most, particularly those in the northern hemisphere. Hence, it is possible that migration will hold up better than it has in the past.”

While Mr Bagrie believes increased net migration inflow is a positive sign for both the economy and housing, net migration is not the holy grail of drivers for the property market.

“There are other forces at play. We are particularly interested in the effect of a deteriorating labour market, particularly as the housing market turned when the unemployment rate was still at historically low levels. The risk is that the recent pick-up in housing market activity will not be maintained,” Mr Bagrie says.

“Therefore, the rise in net migration inflows, if sustained, is more likely to be a key accelerant over 2010, rather than a 2009 story.”