A new economic study claims that, far from pushing house prices up due to increased demand, immigration actually depresses values.
The report by Dr Nils Braakman gives two reasons for this:
• As immigrants move into an area other people move out leaving empty properties behind, these fall into disrepair so sell cheaper.
• Poorer migrants tend to cram together in fewer houses in order to keep living costs down so demand for housing is reduced forcing prices down.
So in areas where immigrants settle, house prices are depressed goes the argument. This means that in London, which is the biggest destination for immigrants, house prices would now be astronomically higher than they already are.
But this phenomenon is only localised to areas where concentrations of immigrants settle. What happens to house prices where the people who left then ended up?
A study last year by Fillipa Spa of Trinity College Cambridge found that a one percent rise in immigrants in an area would lower house prices by 1.6 percent because 0.849 percent of the wealthier locals would subsequently move out.
So presumably, with no real house building programmes in place, the people moving out would be increasing demand for housing in the pastures new so forcing up house prices there?
So on a national level immigration may not place downward pressure on average prices at all.
One also has to wonder who these people are that can afford to up sticks and leave an empty property behind to just decay.
Also bear in mind that the first immigrants would have bought at or near market price having little effect on values. Empty properties will only affect asking price statistics (such as the Rightmove index) and will only reach the Nationwide/Halifax/Land Registry indexes once actually sold – and if they have fallen into disrepair they will sell more cheaply but their value will rise once the new owner has refurbished them, but this new value will of course not be reflected in the indices until the next time they are sold.