WORDONTHES­TREET

Im­mi­gra­tion is good for your house price

The Daily Telegraph - Property - - Marketplac­e - Ed­mund Con­way

As I write, rain is pound­ing my roof and win­dows so hard that some of it has man­aged to trickle into the room. Mo­ments ago I was in the Tube, stuffed up against some­one else’s armpit with the train stuck for al­most 20 min­utes. Later, I’ll be go­ing for a night out which will cost me far be­yond what I’d pay in al­most any other ma­jor city in the world.

I love Lon­don, I love Bri­tain, but on days like this, I un­der­stand why al­most 200,000 Bri­tons left the UK, per­haps per­ma­nently, last year, whether off to the Costa del Sol or Florida or even fur­ther afield.

It is not just be­cause of our high prices, or poor trans­port in­fra­struc­ture or fail­ing schools. Bri­tons are lucky to be per­haps the most em­i­nently ex­portable na­tion­al­ity out there. Our coun­try may have a mas­sive trade deficit but when it comes to valu­able hu­man cap­i­tal, we are world lead­ers. Ac­cord­ing to World Bank re­search, we have the big­gest brain drain in the West­ern world, ex­port­ing more grad­u­ates and post­grad­u­ates per capita than any other lead­ing econ­omy.

What has this got to do with the hous­ing mar­ket? Ev­ery­thing. The two main dy­nam­ics which shape the prop­erty mar­ket are sup­ply and de­mand. The two main rea­sons prices have soared so high so fast in re­cent years – aside from very low bor­row­ing rates – have been that not enough new homes are be­ing built, and that hun­dreds of thou­sands of im­mi­grants have come to Bri­tain, and need a roof over their heads.

The long-term prospects for your house price de­pend in large part on peo­ple want­ing to live in Bri­tain. Mean­while, the short­fall of new homes be­ing con­structed shows lit­tle sign of im­prov­ing for per­haps a decade. Ac­cord­ing to Stephen Nick­ell, head of the Na­tional Hous­ing and Plan­ning Ad­vice Unit, prices will keep get­ting more out of reach even if the Gov­ern­ment meets its in­creased tar­gets for house­build­ing. And how­ever many houses there are means lit­tle if there’s no de­mand from any­one who wants to live here.

Should the cur­rent stream of de­part­ing peo­ple be­come a flood, it would, in the lon­grun, have a neg­a­tive longterm ef­fect on house prices. So all home­own­ers have a vested in­ter­est in en­sur­ing that Bri­tain re­mains an at­trac­tive place to live.

The mi­gra­tion fig­ures prompt an­other thought. They in­di­cate that more peo­ple are com­ing here to live for a few years and then de­part­ing. Those in this “turnover pop­u­la­tion” are far more likely to rent than buy. En­cour­ag­ing, at least, for the buy-to-let mar­ket.

ed­mund.con­[email protected]­graph.co.uk. Ed­mund Con­way is Eco­nomics Ed­i­tor of The Daily Tele­graph

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