Migrants are making housing more affordable

Or so said the FT yesterday


Preliminary findings from Dr Nils Braakmann from Newcastle University run counter to received political wisdom that the substantial influx of eastern European migrants over the past decade is one of the main causes of the sharp increase in British house prices. 

Dr Braakmann’s research identified two reasons for the effect: local people move out of an area as immigrants move in and migrants tend to live in more crowded housing conditions, meaning they take up less space.

The research focused on local areas rather than the national picture. This means that migration could still have the effect of pushing up house prices at a UK level because of the pressure that displaced people put on the housing markets they move into.

However, London is the biggest destination for migrants to the UK, and has by far the biggest housing affordability problems. The research therefore suggests that the capital’s high levels of incomers are helping to keep housing more affordable than it would otherwise be.

The findings back up those of an earlier paper from academics at Cambridge university in 2011, which had similar findings.

Jonathan Portes, director of the National Institute of Economic and Social Research, said: “[This] suggests that fears that immigration raises pressure on already overheated local housing markets in London and the southeast are overblown; in fact it suggests that the knock-on effects of immigration are a modest balancing effect. Certainly it suggests that there is no evidence that immigration is pricing less well-off natives out of London.”

So, in other words, if lots of migrants move into your area, then house prices will decrease in your area, while continuing to go up  elsewhere. That’s hardly a ringing endorsement of the benefits of immigration, I would have thought (and not exactly news either, being one of the old complaints about the arrival of immigrants in a neighbourhood).

The House of Lords suggested
that immigration (at its curent levels) increases house prices by around 13 per cent overall. The Lords concluded in general that the benefits of immigration were mainly felt by the  rich, which is why the most pro-diversity publications tend to be those of the wealthy, such as the Economist and Financial Times. This study of house prices does not contradict that trend.

Comments so far

  1. David Andrews says

    Dr Braakman’s research is focused on specific areas, as far as I can make out, and probably correct:  If a lot of migrants move to an area then prices will drop as the English move out. 
    Mr. Portes on the other hand is either talking out of his hat or being deliberately obtuse, because a moment’s thought would tell him that the people leaving the area have to have gone somewhere, and  those places will have experienced a spike in demand and hence prices.
    In other words, Ed, you’re bang on as usual.

What do you think?