Chart of the Month: Fastest population growth since 1946

Migration has become a hot topic over the last year, with a record high net migration gain. This large inflow of people into New Zealand has seen the population increase by 145,000 people once births and deaths are accounted for – slightly more than adding an additional Dunedin over the last year.

As our Chart of the Month shows, this growth is the fastest in percentage terms since the end of the Second World War!

New Zealand population grows by 2.8%pa in 2023

Over the 12 months to December 2023, the estimated resident population grew by 2.8%, the first time that national population growth has been above 2% since 2019, and faster than the 2.2%pa increase seen in 2016 when net migration last surged (see Chart 1). In fact, 2023 marked only the fourth calendar year since the 1970s that the population has grown at more than 2%.

Last year’s population growth was the fastest growth since 1946, when the population grew 3.2% as Kiwi soldiers returned from the Second World War.

Population growth around the First and Second World War show similar trends. In 1916 and 1917 (March years, so reflective of calendar years 1915 and 1916 respectively) saw population declines of around 0.2%pa a year. This fall likely undercounts the actual population in New Zealand in the war period, as the armed forces don’t appear to be removed from population figures while fighting overseas. The falls were driven by much lower visitor numbers to New Zealand (as wartime regulations forbade most non-official travel). The birth rate dropped, and the death rate rose.

A similar pattern occurred at the start of the Second World War, with population declines in the March 1940 and March 1941 years (after hostilities broke out in September 1939). With the armed forces movements overseas again largely excluded from population figures, the drop in population during WWII and then resumption of stronger population growth post-War reflects reopening of borders.

After the two wartime periods, the next strongest population growth before 2023 was in the early 1950s, when population growth of 2.7% was recorded for the March 1952 year. This growth was driven by strong net migration flows post-war, and higher birth numbers post-war too. In fact, the level of net migration in 1952 was at the time the largest since 1879.

Indications migration will trend lower in 2024

Higher population growth, fuelled by record net migration levels, has put added stress on the economy in recent times. Rents in some parts of the country have started to accelerate higher as more demand hits the market, and hospital services and other infrastructure are further stretched.

The government has started to talk about if migration settings need to be tightened, with Immigration Minister Erica Stanford commenting over the weekend that current migration levels are “unsustainable”.

However, it’s clearly too late to limit the high levels of migration already experienced, and any changes to migration settings might hit just as net migration trends lower. Stats NZ data has shown that monthly arrival numbers have plateaued (on a seasonally adjusted basis) – despite the fact that we are still seeing an additional Taupō District worth of arrivals every second month.

Our analysis shows that the trend number of work visas issued each month, up to January 2024, are at their lowest since August 2022, and are now 15% below peak levels issued at the start of 2023. Job ads are down 12% below pre-pandemic levels, with the unemployment rate rising as job applicants outplace job opportunities. That continued trend throughout 2024 is set to see migration levels scale back – slowly.

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