The net inflow of migrants dwindled to a trickle last month, just 250 on a seasonally adjusted basis.

On an unadjusted basis, permanent and long-term departures exceeded arrivals by 1300, compared with an outflow of 700 in May last year. Net outflows are normal in May.

But the net gain of 250 when adjusted for seasonal patterns was down from 730 in April and 2480 in May last year.

The net migration gain has been on a downward trend since October last year, driven more by rising departures than declining arrivals.

Over the year ended May, however, the net gain was 18,000, 50 per cent larger than the average for the past 20 years.

The net loss to Australia over the year was 15,000, half what it had been the year before.

"New Zealanders will continue to move back across the Tasman, as the Australian labour market outperforms our own," ASB economist Jane Turner said. "We expect this trend to continue over 2010."

The largest net inflows were from Britain (7600), India (5500) and China (3600).

Arrivals from Britain and continental Europe had declined steadily during the recession, Turner said.

"To some degree the fall in arrivals from the UK had been offset by a pick-up in arrivals from Australia, as out-of-work Kiwis returned home in difficult times. However, permanent arrivals from Asia, excluding China and India, are now starting to decline as well."

If net migration continued to ease and started to record net outflows, it could potentially destabilise house prices, particularly if it occurred at a time when other fundamentals for housing demand like interest rates were also becoming less supportive, she said.

"We continue to expect the annual flow to stabilise around 10,000 per annum, similar to the Reserve Bank's outlook."

(Source Brian Fallow, NZ Herald)