123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

Immigration Pushing Up Housing Demand, Land Prices

By Author: Chris Westerman
Total Articles: 133

UK housing and land prices are rising due to immigration and other population factors.

Immigrants to the UK, both ethnic and white, fuel a net population increase. This places price pressure on land and homes, the supply of which lags demand.

For several generations in the Post-War period, the United Kingdom has drawn immigrants from Europe and around the globe. Ethnic populations that have arrived on our shores since the late 1940s have been in concentrations from the former Commonwealth countries – people from the Caribbean, sub-Saharan Africa, India, Pakistan, Bangladesh and China, primarily – as well as individuals of white parentage from South Africa, Australia, New Zealand and Canada. This influx has been unabated in the first decade of the new century, contributing to the 7 percent increase in population recorded in Census 2011.

In simplest terms, increasing population of any kind will drive demand for housing, which these immigration patterns have done. Demand for housing also drives demand for land investment and development, which is currently lagging market needs, a potentially huge opportunity for those looking to get involved in alternative investments. Examining immigrant populations with a bit more complexity, it becomes easier to understand the interplay between immigration, economics and housing demand:

Ethnicity less a barrier to economic ascendancy - While Britain’s storied class structure has diminished a bit in recent decades, there remains a tendency for successive generations to achieve the same social class as their parents. But a series of studies cited by the Joseph Rowntree Foundation in its report, “Migration and social mobility: The life chances of Britain’s minority ethnic communities” (2005) at least finds that this tendency is colour- and ethnicity-blind. The report cites the Oxford Mobility Study (1983), which found that migrant populations, including those of colour, had “a weaker association between origins and destinations,” meaning successive generations fare better economically among immigrants than established populations (this same phenomenon is pronounced in the United States). The classic examples are the immigrants who toil at working class positions while their children achieve university degrees and enter into the managerial ranks.

Home building lags in the UK - The economic downturn since 2007 has certainly put a crimp on home buying and building, but not simply because people have less wherewithal to purchase property. While the population of England and Wales has grown by 3.7 million people in the past 10 years (many of them young and starting families, a point at which home purchases are typical), construction of new homes is remarkably slow. Only about 21,500 new home building starts were recorded in England in the second quarter of 2012, the lowest level in a century and thought to satisfy only about a third of actual demand.

High demand, yet financing is difficult - Younger people, including first- and second-generation immigrants, have difficulty getting mortgages under current financial conditions because they cannot muster a deposit (about 15 percent or more of the value at purchase). Some argue that banks could provide more financing, to builders as well as buyers. This creates a logjam that needs to break, and the sooner the better.

Rents are rising - Average private rents in the UK in mid-2012 were about £750 per month and rising. Higher rents are almost always an indicator of housing demand, and typically a trigger for new building. But the financing problem (see previous item) instead is pushing some builders – financed by insurance companies instead of banks – to build for-let housing.

Note that immigration is not the only factor at work. The Census also identified that pensioners now remain longer in their homes than in the past, a credit to their good health and vitality. We celebrate that fact, but must acknowledge it further exacerbates the housing shortage.

On the whole, this pent-up demand is driving interest in land for development in the future. While brownfield and green belt tracts are considered, undeveloped land appears to be increasingly attractive for development. Many municipalities are turning to their Local Planning Authorities, a product of the Localism Act 2011, to authorize rezoning of agricultural and other-use lands for housing. For many towns, the ability to attract employers includes having a growing population (that is housed, of course). They provide workers as well as consumers, neither of which is available if there is nowhere to live.

Total Views: 114Word Count: 717See All articles From Author

Investing / Finance Articles

1. Asset Reconstruction Company For India
Author: Arnav Desai

2. Summary Of Value Investing: Famous Value Investors?
Author: BhartiJoshi

3. Comparing Quickbooks Pro, Premier & Enterprise At A Glance
Author: Jessica Haizel

4. What Is A Share And What Is A Share Market?
Author: BhartiJoshi

5. Loans Without Guarantor & Credit Check To Fuel Your Financial Strength
Author: Adela Jones

6. What Does Systematic Withdrawal Plan Mean In Mutual Funds?
Author: Bhagath Varma

7. Beat The Summer Heat With 0 Percent Interest Loan On Air Conditioners!
Author: Meenal Wahi

8. Industry Research Reports
Author: Chetan Rathod

9. How To Start Investing In Sip Online?
Author: Bhagath Varma

10. What Is A Mutual Fund And How Do I Invest In Them?
Author: Bhagath Varma

11. Advantages Of Export Documentation
Author: Laural Smith

12. Option Trading - A Free Style Of Trading In India
Author: Mahendra Rajput

13. How Stock Market Advisory Firms Are Helpful In Trading
Author: rajveervyas

14. Fundamental Analysis Of A Company
Author: Aniket Vichare

15. Important Factors To Know About The Sme Loan
Author: Manish Damani

Login To Account
Login Email:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: