Last week Stats NZ published the latest subnational population estimates – an exciting time for those of us with a regional demographic focus. In theory, these annual population estimates should be boring – population should follow a fairly stable and predictable trend. However, our economic and demographic environment continues to be anything but boring. This article explores how New Zealand’s population growth has changed over the past year, before diving into the surprises of the subnational population estimates.

Last October, annual net migration to New Zealand was estimated to be an 11,500 loss for the year to June 2022. Our expectation was for net migration to remain negative into 2023, slowly recovering as New Zealand reopened its international borders. The hot topic then was labour shortages and the brain drain – with nearly all regions and industries facing a shortage of skilled and unskilled labour. Young Kiwis were heading off on their delayed OE en masse, and so too were young families – with a net loss of under-15-year-olds in the year ending June 2022. The then Labour government was pulling all sorts of levers to open up visa settings and enable migrant workers in – initially in a highly targeted manner, eventually moving towards open slather. Despite all this lever-pulling, the net migration dial just didn’t seem to be moving.

However, by December 2022, we started to see several months of positive net migration. Departures were still running high, but arrivals had rocketed up faster. Due to the provisional and modelled nature of Stats NZ’s net migration estimates, recent history was revised up too, showing that net migration had started to increase back in July 2022. Because historical estimates were being revised, the trend changed from flat to rapidly rising, taking us by surprise. By June 2023, annual net migration reached a record high of 92,600. This compares to the previous high of 91,700 the year to March 2020 when New Zealanders rushed home before our borders closed for the pandemic. Our previous record high for ‘normal’ times was 64,600 in the year to June 2016. Interestingly, when we look at what makes up the 92,600 net gain, the trend of young kiwis heading overseas remained – there was a net loss of 37,200 New Zealand citizens. A net gain of 129,800 non-citizens offset the loss of citizens. The year to June 2023 represents an all-time high for non-citizen arrivals.

The dynamic of losing citizens and gaining non-citizens means that the overall net gain of 92,600 plays out differently around the regions – a rising tide is not lifting all boats. Applying Stats NZ’s urban-rural classification, we can clearly see the effect of restricted international net migration followed by a surge on the major urban areas, moving from two years of population loss to a strong gain in 2023 (Chart 1). These major urban areas like Auckland are most exposed to international net migration, so the reopening of New Zealand’s borders has enabled the flow of migrants to resume, boosting population growth.

Large and small-medium urban areas gained from internal migration in 2021 and 2022, as people left the major urban areas, so the return of international net migrants in 2023 represented a modest boost to overall growth. Similarly, rural areas did quite well out of internal migration in 2021 and 2022, so the addition of international migration in 2023 has barely moved the growth rate.

Diving deeper into the numbers, we can identify the specific areas which have gained from the resumption of international net migration. Population growth between 2022 and 2023 jumped most strongly in the likes of Auckland (up 3.5 percentage points), Hamilton (3.1), Palmerston North (1.9), Wellington City (2.5), Christchurch City (1.6) and Invercargill (1.8). Our tourism hotspots pulled in migrant workers to fill their vacancies, boosting population growth between 2022 and 2023 in Queenstown-Lakes (up 6.5 percentage points), Mackenzie (2.7), Westland (2.0), Kaikoura (1.9) and Rotorua (1.8). These main centres and tourism hotspots experienced negligible or negative population growth over 2021 and 2022, so this growth represents an appreciable boost to labour supply, albeit creating housing challenges in the process.

Conversely, other areas are more driven by internal migration, and continue to lose New Zealand citizens who are heading off overseas, without gaining enough from the surge in non-citizen arrivals to make up the shortfall. This seems to be most acute in areas that act (at least partly) as a satellite to larger centres, with growth slowing between 2022 and 2023 in Kaipara, Central Hawke’s Bay, Masterton, Carterton and Central Otago.

Our migration settings are heavily focused around work visas, so we’ve also seen rural areas which have been struggling with labour force shortfalls, especially in the primary and manufacturing industries, gaining a fair share of the net migration gain. Clutha and Wairoa Districts both recorded 1.3% growth in 2023, which may not seem much compared to our growth hotspots, but this represented their strongest growth on record excluding the pandemic period.

Net migration naturally takes the limelight in this years’ population estimates. However, natural increase has an interesting story to tell too – falling to its lowest level in over 70 years. Natural increase, the difference between births and deaths, is expected to trend downwards over the long term as the population ages. However, this long-term trend was exacerbated in 2023, as deaths rose to a record high of 38,300 at the same time as births weakened. Higher deaths reflect the general effect of an ageing population and the specific impact of the COVID-19 Omicron variant, especially in the September and December 2022 quarters which contribute to the June 2023 year. We would expect deaths to moderate somewhat next year as COVID-19 has become more virulent and less severe. The weakness in birth numbers came about through a slight fall in the fertility rate coupled with a 1.2% decline in the 15–39-year-old female population in the prior year. The loss of population of childbearing age reflects net migration losses before the borders were reopened.

As a casual observer, you would be forgiven for thinking that Stats NZ population estimates for 2023 would reflect the 2023 Census – but not so. Stats NZ produces annual population estimates, based on the last published Census data, recorded births and deaths, and administrative data on population movements. Administrative data includes records of the populations’ engagement with public services, such as health and school enrolments, or address changes registered with IRD. The process of compiling and processing Census data into official statistics takes time, with Stats NZ advising that 2023 Census data will be published from May 2024 onwards. For now, our best population estimates use the 2018 Census as a base. The annual population estimates are effectively provisional until the Census is published, so we would expect the 2019-2023 population estimates to be revised in 2024 or 2025, but these revisions are usually modest and don’t change the narrative.

Population estimates in our Regional Economic Profile have been updated to incorporate these latest estimates from Stats NZ. Over the next month, we will update our Population Projections to incorporate the latest estimates too. The Population Projection update will incorporate any revisions to historical estimates, and our latest net migration forecasts. The update won’t result in any substantive changes to our population projections, which are produced with a long-term perspective.

If you want to find out more about the latest population estimates, including movements in your area and the broader trends driving these movements, please get in touch with Nick Brunsdon – 027 322 1686 or nick.brunsdon@infometrics.co.nz.