Kiwi Migrants' Favourite Destination: Is Australia Losing Its Shine?

New Zealanders have long been drawn to Australia's richer economy and better job prospects. But economists say the tide may be turning, as Australia's housing market slows down and its unemployment rate rises.

Australia's GDP per person has diverged from New Zealand's over the past four decades, partly due to commodity prices and terms of trade. However, Shamubeel Eaqub, chief economist at Simplicity, notes that New Zealand's housing market has been unaffordable for a long time.

But recent developments may be changing this dynamic. Australia's economy is slowing down, with household spending growth entering a softer patch and falling house prices. This could make it less attractive to Kiwi migrants, who have historically sought better job opportunities and higher wages in Australia.

Economists agree that the gap between New Zealand and Australia's economies is narrowing, but it may take more than a few years of business cycle divergence to address the structural income differential. Westpac senior economist Satish Ranchhod last year argued that New Zealand's economic growth was likely to outpace Australia's.