The housing market will continue to prosper after net migration increased to its strongest rate in nearly six years last month, as migrants stoke demand for new property.
Seasonally adjusted, a net 2,690 migrants arrived in May, the most since July 2003 when 2,800 permanent and long-term visitors arrived, according to Statistics New Zealand.
"The gain in migration represents a tangible positive ingredient for underlying housing demand, reinforcing the improvement in affordability resulting from lower mortgage rates and falling house prices," said Robin Clements, economist at UBS New Zealand.
"With clear evidence of housing activity turning up, the drag that housing has placed on gross domestic product growth is set to fade in the second half."
In May, the total number of properties sold rose to 6,291, from 4,372 in the same month of 2008, according to the Real Estate Institute.
ANZ National Bank's eight gauges of the housing market this month found the sector was underpinned by strong net migration which boosted demand, amid a slowdown in the number of new building consents issued.
Strong immigration may have helped lift demand for housing at a time when the weak economy has sapped issuance of building consents.
Central bank Governor Alan Bollard this month warned the economy faces risks if signs of stabilisation in the housing market are taken as a sign of another boom, spurring another cycle of "borrow and spend up large."