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A promise of a better life in Australia has drawn many New Zealanders across the Tasman in recent years. But economists say the tide may be about to turn.

As the economy slowed after the post-Covid boom, the number of New Zealanders migrating to Australia picked up. There was a net migration loss of 28,500 people to Australia in the year to December last year, smaller than the 31,100 in 2024 but much higher than the 3000 a year that was normal between 2014 and 2019.

The record was a loss of 43,700 in the year to March 2012.

Simplicity chief economist Shamubeel Eaqub said people were drawn to Australia because the country was richer and had become steadily more so than New Zealand for the last 40 years.

Australia's GDP per person started to diverge from New Zealand's in the 1970s and is now significantly higher.

Eaqub said that was partly because of their commodity prices and a better terms of trade but it was not only mining that helped. New Zealanders were earning less on average and spending more of their income on housing.

But he said where New Zealand's house price relative to GDP per person, and rents relative to GDP had been higher for a long time, they were starting to converge.

"For a long time, New Zealand's housing market has just been really terrible in terms of how unaffordable it is, both in terms of house prices and rents… we spend a lot more of our income on housing compared to Australia, everything else is much the same.

"Ours has got a little bit better and theirs has got a lot worse."

Eaqub said the current slowdown in Australia's housing market could change the picture again but New Zealand had made more progress with its conversation about public policy and housing in recent years than Australia had.

"I'm not saying we're perfect but I think it's far more mature here than it is over there."

He said Australia's economy also had headwinds and unemployment rising, which might discourage people from moving there if their access to welfare was likely to be limited. Australia also has higher central bank interest rates with similar levels of inflation.

BNZ chief economist Mike Jones agreed there were signs that "some of those economic relativities are starting to tilt more towards New Zealand".

"Probably more so from the Australian side as the Aussie economy slows down. Household spending growth there is entering a softer patch alongside falling house prices and a likely further rise in unemployment. As an example, New Zealand job ads have been, tentatively, rising against a flat-to-lower trend in Australia. That's historically quite a good indicator to suggest some narrowing in the big gap between New Zealand and Aussie unemployment rates is likely. That subtle shift in labour market relativities is I think one of the key reasons why New Zealand departures to Australia have slowed up a little."

He said he would still frame it more as New Zealand catching up rather than overtaking.

"Australia's economy starts from an outright stronger position in nearly all areas. Our forecasts do have New Zealand growth catching up and eventually overtaking that of Australia over the next 12-18 months, but it could be quite a while before New Zealand's unemployment rate falls down to where Australia's resides in the mid-to-late 4s."

ANZ senior economist Miles Workman said the two economies had been on different paths for a while.and New Zealand had more of a "boom-bust" Covid experience than Australia.

"That's likely to remain the case for a while yet, with New Zealand starting from a weaker position than Australia in terms of economic momentum, meaning the hurdle to growth in New Zealand should be a bit lower. The starting point for the respective housing markets is a similar story.

"The difference in unemployment rates between Australia and New Zealand helps explain the trans-Tasman migration cycle. Our forecasts have that gap narrowing from late this year, which should reduce some of the incentive to move purely for cyclical labour market reasons.

"However, it will take more than a few years of business cycle divergence to address the more structural income differential between the two countries. Even if New Zealand's economy outperforms Australia's for a period, skilled workers will likely still be able to earn materially more in Australia doing similar work. Australia's labour market is also larger, with more major cities, industries and career opportunities to choose from."

He said it was possible New Zealand would start to look more attractive over the next little while, because it was coming off a weaker base.

"Closing the gap with Australia in a more structural sense would require stronger productivity growth over the long run, which is what ultimately drives higher incomes. A cyclical upswing alone is unlikely to be enough."