The key factor driving up house prices


Independent economist, Tarric Brooker, has published an interesting chart on Twitter showing how “the ramp up in migration has supported housing prices in Canada, New Zealand and Australia”:

House price rebounds

Source: Tarric Brooker

The chart uses the month Auckland, Sydney and Toronto house prices bottomed as the base or month 0.

“For Sydney this is 10 months after borders reopened, for Auckland 11 months and for Toronto its 9 months after migration began rising above pre-Covid seasonal levels”, Brooker says.


“Different locales had different lag times, which is perhaps unsurprising given NZ had the tightest restrictions on movement and Canada the loosest”.

The house price rebounds across these cities has occurred against the rapid increase in interest rates by their respective central banks:

Policy interest rates

Normally, such massive rises in interest rates would crash house prices by lifting repayment levels on new mortgages alongside cratering borrowing capacity.

Unusually, house prices are rising across each nation because of record immigration flows.

On Thursday, Australia reported its largest ever increase in net overseas migration (NOM) and population growth ever over the March quarter:

Australian immigration and population growth

New Zealand also recorded its strongest ever NOM in July:

New Zealand immigration

Whereas Canada’s population increased by a little over 1.2 million people in the year to March, with NOM accounting for nearly all (98%) of that increase:

Canada population growth

Thus, the sheer volume of people flooding in to all three nation’s has outweighed the rapid interest rate increases and driven the house price rebounds.


One shudders to think what will happen if the extreme NOM continues and central banks begin cutting interest rates.

It could send house prices shooting higher.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.