Is Housing the Main Cost of Migration? Christine Whitehead and Kathleen Scanlon Migration and the Transformation of London: Roundtable LSE London Friday October 5 th

A starting point The 2008 House of Lords Select Committee Report:  Immigration could add 13% to real house prices over 20 years (and by implication a lot more in London) affecting wage rates and competitiveness  Significant potential increases in the pressure on social housing and on local services  Enough to offset the positive GDP impacts?

Migrant housing demand Compared to those born in the UK: On arrival: differences in  household formation  income  tenure After 10 years: similar demand to those born in the UK?

Headship rates by age and length of time in England, 2002 – 2005 (%) Age and over Born outside the UK Entered less than 5 years ago Entered UK years ago Entered UK years ago Entered UK 20 years or more ago Born in the UK Whole private household population

Income distribution by type of household and length of time in England (%) LONDON Migrants from poor countries Migrants from rich countries All migrants QuintileOverall < 3 years 3+ years < 3 years 3+ years < 3 years 3+ years Source: Labour Force Survey, 2009

Tenure by type of household and length of time in England (%) LONDON Migrants from poor countries Migrants from rich countries All migrants Tenure Overall < 3 years 3+ years < 3 years 3+ years < 3 years 3+ years Owner outright Owned with mortgage Social rented Private rented Source: Labour Force Survey, 2009

Tiers 1 and 2 migrants from outside EU (1) LSE London research for MAC (2012): About 75% of visa-holders form separate households in first year. The rest will mainly share private rented accommodation. Migrants tend to be younger than the general population and to be either single persons or couples. Over time the proportion forming households and their household structure moves more towards the UK average.

Tier 1 and 2 migrants from outside EU (2) At first about 70% in PRS, 20% in owner occupation. Tenure mix changes slowly--owner-occupation up to 45% after 5 years. Most important impact is on PRS, especially given the extent of turnover among migrants. Starting from 2011/12 and assuming constant levels of entry, by 2017 about 112,000 additional households will have entered and remained--or about 7% of the total 1.5 million additional households in the UK during the same period.

Tier 1 and 2 migrants from outside EU (3) Qualitative evidence suggests competition for housing is strongest with other migrants. But overall the impact of this type of migrant, even on local markets, was seen as small. The impact on house prices of the accumulated increase in Tier 2-type immigrants over a five-year period is likely to be well below 1%. This might generate some transfer of properties to the rented sector but the effect on total new supply is likely to be very limited.

Implications in the shorter term Relatively newly arrived migrants consume less housing than the local population – so if we need the labour, housing less important than might seem Non-refugee immigrants have very limited rights to social housing or to housing benefit until they have residence status Impact on private sector rents and house prices is quite limited Impact on housing standards in terms of overcrowding etc. probably significant but unknown (Census should help)

Longer-term impacts Is migrants’ impact on new building and prices proportionate to their numbers? Some evidence of dependence on social housing among households from lower-income countries – but their access to the UK now heavily restricted. Do migrants move out from central areas in the same way as UK-born? Importance of child bearing patterns (again need to analyse the Census) Migrants do generate housing costs and housing constraints – but do these offset productivity and growth effects?

And what about international investment from non-migrants? Savills report suggests massive proportionate growth in international demand for new build in prime locations (now including East London) 2009: 25%--2011: 63% Increasing domination of Pacific Asian demand except for property over £5m – where Russian and Middle East demand Keeping the housing market going in the short run ? But reducing the housing available to the market in the longer term?