Is the Aussie dream fading?

Is the Australian dream fading?With Australian unemployment numbers increasing sharply, economists say the trans-Tasman pull may lessen for New Zealanders.Data last week showed the Australian unemployment rate reaching 4.7 percent, the highest in a decade. That is still below New Zealand's rate, currently 5.6 percent, but the International Monetary Fund says Australia is on track to have the largest increase in unemployment in the developed world over the next year.BNZ chief economist Mike Jones said the gap between the Australian and New Zealand economies was narrowing."Australian economic growth is slowing, the labour market is losing steam and house prices are falling, so there's an element of catch-down happening," he said. "At the same time, the NZ economy is managing to maintain momentum, with forward indicators still consistent with reasonable growth ahead."It's notable that NZ's economic recovery, underwhelming though it's been, has closed the growth gap to Australia. Annual growth in the second quarter was 2.6 percent, above Australia's 2.1 percent."It's nonetheless important to emphasise that the bar for some NZ growth catch-up has been low, given the weak economy of the past few years, and a faster rate of NZ growth over the next 12 months or so will not close the gap in the level of activity that opened up as the NZ economy struggled through 2024 and 2025."Job opportunities tend to be the swing factor in trans-Tasman migration trends. Rising unemployment in Australia might put some off, although the labour markets in both countries are relatively weak."We noted recently that it looked like annual migration outflows to Oz could ease off to about 20,000 over the coming 12 months, so a reduction in net outflows, but a long way from Kiwis beating a path back to our shores en masse."At ANZ, Miles Workman said New Zealand and Australia were at different points in the economic cycle."New Zealand is recovering from a cyclical downturn, while Australia's economy appears set to soften from a stronger starting point," he said. "That divergence is likely to be reflected in labour market conditions and, in turn, trans-Tasman migration flows."He said flows between the countries would likely be affected, because when Australia's labour market was stronger than New Zealand, more people tended to move there.Westpac chief economist Kelly Eckhold agreed."I think that will certainly be a factor in continuing the trend that we've seen probably for maybe for 6-7 months, 6-8 months now that there have been fewer people departing New Zealand to go overseas."He said consumer sentiment in Australia had turned sharply, whereas New Zealand's had generally improved for the last six months."In Australia, consumers are really having to deal with a much more aggressive central bank. They've had three tightenings this year."Expectations will be, you know, one more at least coming down the pipe and the housing market over there has really changed around a bit in terms of trends and sentiment."New Zealand faced higher interest rates too, but he said the turnaround was bigger for Australia.Data from Stats NZ shows that, in the year to August 2026, there was a net loss of 38,200 migrants compared to 39,900 a year earlier.In the year to March, 27,900 New Zealand citizens went to Australia, compared to 31,100 in the March 2025 year.Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money