(Bloomberg) -- New Zealand’s record level of immigration is unsustainable and the government expects it to slow, Prime Minister Christopher Luxon said.

The net annual immigration gain of 118,835 people in the year through September “doesn’t feel sustainable for New Zealand at all,” Luxon told Radio New Zealand Monday in Wellington. “We understand that there is a little bit of catch up that has been needed to fill some shortages that have existed since the lockdown periods. We expect that to be slowing month on month.”

New Zealand’s population rose 2.7% in the September year, its biggest jump in more than 30 years, as immigrant numbers surged. The Reserve Bank last month surprised markets by signaling a greater risk of a rate hike next year, citing concern that the flood of new arrivals is pushing up rents and house prices and may fan inflation.

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Luxon’s comments come after Australia said it plans to bring its own record-high levels of immigration under control as it struggles with a growing housing crisis and soaring rents.

Luxon didn’t provide any target for annual immigration, noting that New Zealanders and Australians are free to come and go, which makes it hard for governments to set exact numbers. 

He said the key is to link immigration policy to worker shortages and the government’s broader economic agenda. At the same time, the government has to manage the infrastructure that’s needed to support that population growth, he said.  

The previous government had been too loose with its immigration policies, allowing more people to arrive than was necessary to meet skills shortages, said Luxon, who took office late last month after winning the October election.

“It was really complete and utter open floodgates,” he said. “We have to make sure that we are getting the settings right. They’ve gone from being way too restrictive to being way too loose. We’ve got to find that balance and that’s the work we are going to get into in the next few months.”

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