Recent research by the Reserve Bank of New Zealand suggests that “immigration shocks” can lead to higher house prices and greater household credit.
An immigration shock refers to a situation in which a country experiences a sudden, unexpected or large-scale increase in the number of migrants.
The study also showed that older immigrants (ages 30 to 44) were more strongly linked to increases in labour productivity, whereas younger immigrants (ages 15 to 29) had a more noticeable impact on reducing unemployment.
In addition, it found that while the overall headline Consumer Price Index (CPI) was not affected by high migration, the cost of “non-tradeables”—locally produced goods and services that cannot be imported or exported, including housing and credit—was “significantly elevated” approximately one year after an immigration shock and remained so for an extended period….
NZ Reserve Bank Links ‘Immigration Shock’ to 20 Percent Change in Housing Prices
