Saturday, 31 March 2012

Immigration can ‘push down house prices’

Even a small influx of people from overseas into an area can have a noticeable effect on the value of local properties as wealthy people move out, the study concludes.
The research, the first of its kind, contradicts the assumption that immigrants are pushing up house prices and making them unaffordable for those originally there.
In a paper presented to the Royal Economic Society’s annual conference, Filipa Sá, an economist from Trinity College Cambridge, compares local employment figures from the Office for National Statistics with property records from the Land Registry.
She found than an influx of immigrants equal to one per cent of the local population was linked to a 1.6 per cent drop in average local property values.
This was because about 0.9 per cent of the local "native" population moved out – usually wealthier people.
Miss Sá said: “This finding can be explained by two factors. First, there is some evidence that immigration has a negative effect on native wages at the lower end of the wage distribution.
“Second, natives who leave the city are at the top of the wage distribution.
“This generates a negative income effect on housing demand and pushes down house prices in local areas where immigrants cluster."
The pattern only applied in areas where the arriving immigrants were poorer. In areas where those arriving from abroad came from the top of the income scale – such as in the City of London – the pattern was often the opposite.
- John Bingham, The Daily Telegraph

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