Greengates Builders Merchants

House Prices Effected By Immigration!

CUT HOUSE PRICES

 

This is an interesting article written by Sarah O'Grady for the Daily Express that we thought you might not have seen but is very interesting.

House prices fall when low-paid immigrants move into an area,reveals a contro­ver­sial study.

In the first study of its kind researchers studied data from the Labour Force Survey and the Land Registry and discovered that a one per cent rise in immigrants leads to 0.9 per cent of the local population moving out.

Just a one per cent influx of poorer immigrants leads to a 1.6 % drop in property values – wiping the equivalent of £2,560 off the price of the average three-bedroom semi-detached house.

This negative effect on property prices only happens where the general level of education among the incoming immigrants is low.

In areas where immigrants tend to be better educated – in the City of London, for example – their higher wages counteract the effect of locals leaving and can lead to a rise in house prices.

Dr Filipa Sa, of Trinity College, Cambridge, who led the study, said the locals who move out of areas suddenly transformed by a large influx of immigrants “tend to be the highest earners”.

Those left behind could see their property values tumble.

She added: “This reduction in the overall income of the community reduces the demand for houses – lowering their prices.”

Over the past 20 years both immigration and house prices have risen signi­fic­antly in Britain.

Immigrants now account for more than one in eight of the working-age population, up from one in 12 in the mid-1990s.

Over the same period the average price of a house has more than doubled from just over £60,000 in 1995 to more than £160,000 in 2010.

This had led to many experts suggesting that the rise in immigration has helped boost house prices – but Dr Sa thinks the opposite can be true.

She said: “In principle, immigrant inflows would increase the demand for housing.

“This would lead to an increase in house prices and rents.

“But immigration may be associated with native out-migration. This would affect housing demand and house prices via an income effect.

“The results suggest that immigration has a negative effect on house prices.”

Property values in areas with lots of poorer immigrants tend to fall because a supply of cheap labour keeps salaries down for everyone.

Those among the indigenous population who move out tend to be the ones on higher wages.

Once they have gone, the homes they leave tend to fall in price so that they are affordable for poorly-paid immigrants.

Dr Sa was due to present her research at the end of March at the Royal Economic Society’s annual conference at Cambridge University.

 

“So what do you think? Do prices rise or fall?” asks Greengates Builders Merchants Accrington, Lancashire.

 

 

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