Dominic Raab, the housing minister, has rightly been asked to produce the evidence to back up his claim that immigration has put up house prices by 20 per cent over the past 25 years when the research suggests that immigration is just one factor pushing up housing demand and a minor one at that.
The Migration Observatory, which publishes regular briefings on housing and migration, says that evidence on the link with housing costs reaches no firm conclusion.
Two recent studies have even shown that an increase in an area’s foreign-born population brings a slight fall in house prices. Christine Whitehead looked at housing demand from highly skilled migrants and concluded that the effect on the market is very small, even in London. Meanwhile, the last report from the official Migration Advisory Committee (MAC) in 2014 concluded (from lack of evidence to the contrary) that “migrants reduce house prices”.
The housing minister says that the MAC “airbrushes” the impact on housing, citing unpublished evidence from the ONS to back his claim that house prices have increased by 20 per cent in 25 years because of immigration.
But his own figures unwittingly seem to confirm how small the effect is. The average house price in 2016 was £236,000; twenty five years earlier it was just £62,000. Taken literally, if a 20 per cent increase occurred because of immigration, this added only £12,000 to 1991 prices, while other factors added the rest – a whopping £162,000.
Where in the UK did we see the most dramatic growth during the house price boom a decade ago? It wasn’t in London but in Northern Ireland, where prices shot up by 78 per cent in just two years. Yet in 2011, and in 2001, the province was the part of the UK with the smallest proportion of people born abroad. Scotland and Wales, also with low immigration levels, saw house prices rise faster than in England in the early 2000s boom.
The real problem about Mr Raab’s assertion is that it oversimplifies a complex problem that no one understands sufficiently.
Original Post and comments: The Times