Immigration damages house prices, say Home Office advisers
07-10-2014
Property prices fall 1.6 per cent for every percentage point of migrants who move into a local authority area, says Migration Advisory Committee report
The Migration Advisory Committee (MAC) said research showed there was a “significant negative association” between property values and immigration.
By David Barrett, Home Affairs Correspondent
Immigration has a negative impact on house prices when foreigners move to areas of the country previously dominated by British citizens, according to a major new report.
The Migration Advisory Committee (MAC) said research showed there was a “significant negative association” between property values and immigration.
If the immigrant population of a local authority grows by one in 100 overall, then house prices will fall by 1.6 per cent on average, the study found.
The MAC said research in the area suggested the phenomenon was down to a range of factors including migrants being more willing to live in overcrowded conditions - for example, in shared houses - heading to a general fall in demand in the market.
It was also thought to be due to overall wealth declining in areas of increasing immigration, as British-born workers move out and lower-paid immigrants move in.
Other research examined by the committee suggested that homes in the average to low price bracket were those most likely to be affected by immigration, while it exhibited “almost no effect” on prices” among higher-value properties
“The results suggest that migration has a significant negative association with house prices at the local level,” the report said.
“Specifically, an immigration inflow equal to one per cent of the local authority’s initial population leads to a reduction of 1.6 per cent to 1.7 pe rcent in house prices compared to what it otherwise would have been.”
The original academic paper referred to by the MAC, written by Filipa Sa of Cambridge University in 2011, which has only just come to light, examined data on immigration and house prices in 159 local authorities in England and Wales. It examined prices between 2003 and 2010.
The author produced a mathematical model based on the research and concluded: “It finds that immigration has a negative effect on house prices and presents evidence that this negative effect is due to the mobility response of the native population.
“Natives respond to immigration by moving to different areas and those who leave are at the top of the wage distribution. this generates a negative income effect on housing demand and pushes down house prices.”