Friday, April 15, 2011

Record immigration plus a record low in house building equals?

Almost one in eight people living in UK are born abroad

We are often quick to dismiss the "housing shortage" argument but could we be ignoring the major cause of high house prices in this country. This article tells us that “three million foreigners were added to the population during the party's 13 years in power”. How could that not put a strain on the housing supply, at a time when we are building fewer houses than ever?

Posted by flashman @ 09:09 AM (1966 views)
Please complete the required fields.



23 thoughts on “Record immigration plus a record low in house building equals?

  • mark wadsworth says:

    Ho hum.

    1. I’m against immigration in that people who don’t want to fit in shouldn’t be allowed in (those who do want to fit in are welcome),
    2. but let’s not forget that the few houses which were built over the past ten years were all built by migrant labour (bless ’em), and
    3. the three million gross figure is possibly correct (and they were given a disproportionate amount of social housing and public sector jobs) and the one-in-eight figure is also possibly correct (I thought it was one in ten?), but more relevantly let’s look at the actual population, shall we?

    1997
    18 or under =11,887,199,
    19 to 59 = 28,966,775
    60 and over = 5,616,939

    2010
    18 or under = 11,635,364
    19 – 59 = 31,104,579
    60 or over = 7,057,560

    Broadly speaking, number of children the same, number of working age adults up by 2.1 million, number of pensioners up by 1.4 million.

    Seeing as immigrants tend to have relatively modest housing arrangements and pensioners the most generous housing arrangements, I wonder whether people’s longer life expectancies have a much larger impact???

    Reply
    Please complete the required fields.



  • mw: So there are millions more people over 19 and about the same number of people under 19. The countries where people emigrate from, tend to have many more young people than old people, so it seems likely that within half a generation, we will have far more people under 19 as well as far more people over 19.

    It is probably no coincidence that they have experienced a decent HPC in America, Spain and Ireland (they have a housing surplus in those countries). House prices in this country have been remarkably resilient in the face of some awful fundamentals. Up until this point, I have been convinced that relatively low unemployment and its weaker cousin interest rates have been the two props that have successfully defeated the other fundamentals. However I think I may have been wilful ignoring the housing shortage factor.

    I imagine that comparing a series of simple ratios to house prices would tell us quite a lot. The demand: supply ratio could be something like this –

    BEDROOMS REQUIRED : NUMBER OF EXISTING BEDROOMS IN THE UNITED KINGDOM plus NEW BEDROOMS BUILT minus BEDROOMS DEMOLISHED

    Reply
    Please complete the required fields.



  • sibley's b'stard child says:

    “2. but let’s not forget that the few houses which were built over the past ten years were all built by migrant labour (bless ’em)”

    If you don’t mind me asking MW, what are your sources for this? Even if it were true, it’s hardly justification, just demonstrates the builders’ penchance for cheap labour. The father-in-law says its quite common for firms to lay-off British qualified scaffolders and instead use the immigrant labourers to the perform the same job but on the cheap.

    Back to Flash’s point – although I think net migration was rather less than 3 mill; around 2.5 mill – the effects (on housing) can’t be discounted.

    Reply
    Please complete the required fields.



  • if prices were just about supply/demand then india would have the highest houseprices in the world

    its about supply of credit with supply/demand secondary but important

    Reply
    Please complete the required fields.



  • We see evidence of over building in US, Ireland and Spain, but we have 800,000 unoccupied homes here also. Our housing construction companies were not slow in taking advantage of the fantastic opportunity that presented itself over the price boom decade. Every town and village in the country has its little new estates attached to them, not to mention the massive developments in our cities.

    So what were the population growth figures in those three countries?

    Just a snapshop but 2009 population growth rates were: Ireland, 1.12%; US, 0.98%; UK, 0.28%; Spain, 0.07%.

    Reply
    Please complete the required fields.



  • Hi nomad: Spain, Ireland and the US recently built more square metres per head of population than we did. They also have more available land per population to build on. We could, for sure, be more efficient with the property we do have but there is no disguising the fact that we have a relative shortage of stock and land (current and potential) when compared to the countries that had a proper HPC

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    F, SBC, neither do I dispute that immigration has mainly benefitted the ‘already wealthy’ (employers, landlords, homeowners) and hurt the British working classes. Those are facts.

    And yes, immigration must have had some impact on house prices – but out of those extra 2.1 million, how many are immigrants and how many just British people who have grown up? Cal it ratio 2 to 1 for safety?

    Therefore, by all means, let’s look at the impact of 1.4 million extra working age people on house prices (remembering that they are far more likely to share houses or even live several people to a room) BUT LET US NOT OVERLOOK the fact that there are also another 1.4 million over sixtys, who by and large tend to own houses and live as a couple or as singles.

    The number of rooms occupied by average pensioner is probably about three; the number of rooms occupied by an average recent immigrant is probably less than one.

    THEREFORE increasing life expectancy had THREE TIMES AS MUCH impact on house prices as did immigration, I don’t know why anybody would dispute that.

    Reply
    Please complete the required fields.



  • general congreve says:

    Anecdotal for you. Oxford has Europe’s second largest sink estate (Blackbird Leys) on it’s eastern side (you don’t ever see that in Morse!), plus a couple of other smaller, but equally unpleasant, sink estates in the vicinity (I know because I used to live just on the edge on one). These sink estates are full of the under/unemployed, I’ve seen it with my own eyes. For example, the woman in the pristine new-build LA house that was opposite my old flat had a people carrier, a Peugot 206 and a house that on the on open market would have fetched around 300k, in addition to her benefits she made money selling drugs.

    Last summer I went to the Tesco’s superstore on the edge of Blackbird Leys. It was incredibly busy and I had to walk the full length of the checkouts to the end of the store to find the shortest queue. I could see and hear all the checkout staff as I went by, unconciously I started to notice that every single one not only looked foreign but had a foreign accent. The chap who served me was African and barely spoke English. Afterwards I crossed the car park to grab some lunch in the Burger King. To a man/woman all the staff were foreign, African Manager, Eastern European servers.

    On Wednesday this week I went in to Oxford centre and 8 out of 10 of the staff I dealt with in the shops were also foreign. I don’t mean the children of immigrants, I mean new immigrants with accents that I often struggled to understand.

    Not don’t me wrong, I’m no racist. I am well travelled, consider myself an internationalist and one of my ex’s was black British, if there is any doubt amongst you. I also do not blame any of the staff in those shops for taking the opportunity to better their lives here. But why do those opportunities exist? Because we pay millions of our own citizens to be idle, citizens that in the case of that Tesco’s, live within walking distance of the store.

    Now I’ve worked on supermarket checkouts as a student and found it soul destroying, so I can understand why, given the opportunity, people will take free money rather than do that job. But why are we giving away free money when jobs exist?

    That said, I’d rather be served by some Polish Honey than some greasy fat chip-loving English munter, so perhaps higher taxes and house prices are a price worth paying?

    Reply
    Please complete the required fields.



  • If Europe’s second largest sink estate is Blackbird Leys, which is the largest GC?

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Mr G, the largest is The Republic of Ireland.

    Reply
    Please complete the required fields.



  • sibley's b'stard child says:

    Mr G, I would have thought the Aylesbury Estate, my old stomping ground – though I may stand corrected.

    MW, very good.

    Reply
    Please complete the required fields.



  • @8 ” BUT LET US NOT OVERLOOK the fact that there are also another 1.4 million over sixtys, who by and large tend to own houses and live as a couple or as singles.”

    Pre- election the Labour CLG produced a forecast that 25% of all residential housing stock could be single occupancy by 2031. Ironically the mail has an article today which may support the projection:-

    “Baby boomers have become a generation of loners, with millions living without partners or children.

    The numbers of those in their late 40s to early 60s who live by themselves has risen by almost a third in a decade, official figures showed yesterday.”

    It’s a big factor in all the equations.

    Reply
    Please complete the required fields.



  • mw: For the purposes of this post, I am not particularly interested in exactly what type/age group of UK inhabitant is responsible for high house prices. I am only interested in the (price) effect that a growing population has on a constricted housing supply. I think we (me included) have a tendency to studiously ignore or even shout down the shortage of supply argument. I don’t think we should.

    Regarding GCs post. We all know that we have way more immigrants here than is suggested by the official numbers. We are therefore doing ourselves a disservice if we try to analyse the effect of immigration, on house prices, by only looking at the official numbers.

    You point out that “increasing life expectancy had THREE TIMES AS MUCH impact on house prices as did immigration”. This is probably true when using the official immigration numbers but the ratio is almost certainly nearer to 1:1 when the real number of immigrants is taken into account. The situation is likely to get worse which will supply some very decent ammunition to the forces that are maintaining high rents and property prices

    Reply
    Please complete the required fields.



  • GC,

    I don’t think there’s anything terribly unusual about your observations.

    Cutting benefits is the populist solution, but one that terrifies politicians into inaction..

    Raising the minimum wage (and being more rigorous over its enforcement..) probably has some merit, in order to narrow the gap between benefits and wages.

    However, I believe most unemployed people, if motivated, can either find work or create it for themselves – even if they live in a sink estate.

    – I wonder what percentage of unemployment claimants would still be claiming after a few months, if they were required to report to the benefit office at 9.00 a.m. every weekday morning..?

    Reply
    Please complete the required fields.



  • sibley's b'stard child says:

    That’s a good point Flash (re: discrepancy between official and unofficial figures), secondary to that is the issue raised by demographical data extrapolated from the no doubt woefully obsolete 2001 census (not least in connexion with Labour’s immigration policy). For instance, official estimates reckons that Dagenham is comprised of 15% BME which in no way correlates (I would tentatively argue double that) to my daily experiences. It’s for this reason that I look forward to the 2011 census data due out in June 2012.

    It’s hard to have a reasonable debate when the data is either fudged or out-of-date.

    Reply
    Please complete the required fields.



  • sibs: Your mention of Labours immigration policy got me thinking at a tangent. The Tory property lovers who didn’t vote for Labour in the last election were mind-bendingly disloyal/ungrateful to poor old Labour. Short of issuing free Laura Ashley frocks, what more could they have done to get the typical Tory property owners vote?

    The last labour government gave them:

    Low interest rates (particularly the 2005 debacle)

    Absolutely no supervision of the banking and finance sector

    Unchecked immigration leading to sky high demand for their BTL portfolios and soaring prices on their lion gated Mcmansions

    Super low levels of house building and enough red tape to cause a million planning application stillbirths

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Flash 17, exactly.

    Labour did their best to be the Red Wing of the Home-Owner-Ist movement, and it worked very well for three General Elections (as we’d expect) but then they dropped the ball 2008-ish and prices started going down again so the Home-Owner-Ists (from Murdoch and the bankers downwards) then swung behind the Blue Wing who have so far done reasonably well in keeping the house price bubble going.

    As to shortage of supply, yes of course it must have some impact (which is why i am sick and tired of hearing about The Hallowed Green Belt and Garden Grabbing), but it’s difficult to tell how much. I think we can rule out a large effect because of the simple observation that if there were a real shortage, then RENTS would have increased significantly as well. As it happens, they didn’t – rents increase (or decrease) in line with increases (or decreases) in the average wages in any area.

    Or to put it another way (going by Nationwide figures), the house price-to-income ratio doubled over ten years and the house-price-to-rent ratio also doubled (in others words, rents and wages moved exactly in line).

    Reply
    Please complete the required fields.



  • “The Tory property lovers who didn’t vote for Labour in the last election were mind-bendingly disloyal/ungrateful to poor old Labour.”

    For ‘Tory’ read ‘Champagne socialist’ – when the fizz goes out of their glasses, they can get very grumpy..

    Reply
    Please complete the required fields.



  • mw: “I think we can rule out a large effect because of the simple observation that if there were a real shortage, then RENTS would have increased significantly as well”

    I don’t think that’s necessarily true. Even where there is massive demand for rental properties, the amount of rent achievable is inexorably linked to wages. They can realistically only charge what is left in a pay packet (no one borrows to pay the rent or at least I fuccing hope they don’t). By way of contrast, the purchase price of a house is not always inexorably linked to the wage packet. In times of plentiful credit, how much can be borrowed is often more important than how much is left in a wage packet.

    Reply
    Please complete the required fields.



  • @MW & SBC

    IMHO you’re both wrong, Bradford probably beats both of your suggestions.

    Nothing personal MW I can assure you, if memory serves me correctly, I think you said that you originated from there.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Flash: “By way of contrast, the purchase price of a house is not always inexorably linked to the wage packet.”

    In ABSOLUTE terms no, that’s how prices manage to rise from a multiple of three to a multiple of six and hence back down to five or five and a half.

    But in RELATIVE terms there is a very close link. I once downloaded ASHE’s list of average wages in 350 local council areas and BBC’s average price in a semi-detached in those 350 areas and stuck them in Excel, the correlation of coefficient is 0.9 (i.e. very high).

    I mean, I don’t make this stuff up, I’ve taken a keen interest in it for fifteen years and have endless sources that have consistently all said the same thing going back decades or centuries:

    1. Rents and wages – closely correlated in absolute and relative terms.

    2. House prices and rents/wages – closely correlated in relative terms.

    3. House prices and rents/wages – little relation in absolute terms – with easy credit the multiple is high, with scarce credit or high interest rates, the multiple is low.

    Reply
    Please complete the required fields.



  • mark: The stark differences in correlation results between rent and wages and house prices and rent/wages, rather confirms my point that we can not assume that there is not a significant housing shortage just because rents and wages are closely correlated (your comment: “I think we can rule out a large effect because of the simple observation that if there were a real shortage, then RENTS would have increased significantly as well”). Rents can’t rise “significantly as well” because rents and wages have no possibility, other than to be closely correlated, no matter the demand. You can’t get rental blood out of a stone pay packet.

    I think we can however safely assume that the sharp rise in house prices is, in part, attributable to a scarcity of stock (easy credit breaks the link between house prices and wages, which enables house prices to reflect the scarcity of supply, in a way that is not possible with the rental market.

    Have a great weekend

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>