In response to demands that he produce the evidence for his claim that immigration is driving up house prices, the housing minister has now published the calculations. Do they back up his argument?
First, it must be said that researching the drivers of house price increases is fraught with difficulty as there are so many factors involved – not least a degree of sometimes irrational human behaviour given that houses are not merely places to live in but for many are an investment, a source of income or bought in order to speculate on future prices. Especially in the past few years, would-be owner-occupiers have been operating in the same market as a rapidly expanding private rented sector. So if projecting the demand for housing in terms of the number of units is a challenge, translating that into effects on house prices is much more so.
What strikes the reader immediately about the new calculation is its simplicity. The original piece of work produced what was really a rule-of-thumb relationship between household growth and house prices: if the former increases by 1%, the latter will go up by 2%. The context – the years up to 2008 when the research was published – was a period of very strong house price growth.