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Impact of skilled migration on access to housing and the housing market in the UK

Impact of skilled migration on access to housing and the housing market in the UK. NORFACE Migration Conference 2013 Christine Whitehead, Ann Edge, Ian Gordon, Kath Scanlon , Tony Travers LSE London. Research question.

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Impact of skilled migration on access to housing and the housing market in the UK

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  1. Impact of skilled migration on access to housing and the housing market in the UK NORFACE Migration Conference 2013 Christine Whitehead, Ann Edge, Ian Gordon, Kath Scanlon, Tony Travers LSE London

  2. Research question • What effect does skilled migration from outside EU have on UK housing market—overall and in particular cities?

  3. Background • Research commissioned in 2011 by Migration Advisory Committee • Coalition government: target to reduce net migration to the ‘tens of thousands’ • LSE London: • Urban, metropolitan and housing research

  4. The Points-Based System (from 2008) • Tier 1 visas: • Entrepreneurs (no limit) • Investors (no limit) • Exceptional talent (max 1000) • Tier 2 visas: • Shortage occupations (minimum salary) • Resident labour market test (min salary) • Overall limit SO + RLMT = 20,700 per annum • Inter-company transfers • No numerical limit • Migrants can generally remain 3 years + 2

  5. What the literature tells us • Migrants in all income groups • initially form fewer households than indigenous population • are more likely to live in the private rented sector • consume less housing than indigenous population • But after a decade or so the differences are small • Migrants tend to live in cities, and to cluster • Economic migrants from rich countries more likely to return than those from poor countries

  6. What do we need to know? • How many Tier 1 and 2 migrants, and from which countries? • How long do they stay? • What types of household do they have? • Where do they live? • What is their income distribution? Do they receive employer help with housing costs? • Does housing supply respond to this new demand (either tenure change or new construction)?

  7. Existing data and limitations Numbers relatively small: in 2009 Tiers 1 & 2 migrants = about 10% of all non-EU migrants • Census • Labour Force Survey • English Housing Survey • UKBA administrative data

  8. Methodology • Use Labour Force Survey to estimate numbers of migrants, based mainly on qualifications and household types • Use UKBA administrative data to infer residential locations • Analysis (not modelling) of types and location of housing demand • Qualitative interviews with estate agents and relocation agencies in relevant areas

  9. Quantitative findings: how many?Main visa holders

  10. Dependents

  11. Countries of origin

  12. How much do they earn?

  13. Where do they work?

  14. Where do they work?

  15. What kinds of households?

  16. What kinds of housing?

  17. How does that change over time?

  18. Some implications • 20% of these households do not fit the sixteen new household categories – which implies that large numbers share as multi-adult households • Indian ICT workers—a major category—tend to be in this group

  19. ... • Migrant households initially consume much less housing than equivalent resident households. • As migrants become more settled their households change character and they consume more housing and become owners • Therefore impact depends on how long migrants stay

  20. How long do they stay?

  21. Qualitative findings • Interviews with estate agents and relocation agents in London & Aberdeen; survey of lettings agents • Most such migrants rent flats—key factors are travel to work time and schools • ICT migrants generally compete with other migrants because able/willing to pay higher rents • High-income migrants benefit from relocation packages and housing allowances

  22. ‘Non-EU relocators’ made up at least 10% of clientele for all agents who responded—and in some cases over 75%. • Most common nationalities American, Middle Eastern, and Russian • Most looking for unfurnished houses or furnished flats

  23. Clients generally planned to stay 1-2 years in the rented property • Certain neighbourhoods seen as attractive to particular nationalities: Chelsea, Kensington – Americans Knightsbridge, Mayfair – Arabs Canary Wharf – Chinese • No consensus about whether demand from such clients affected rents—30% said yes, 70% said no.

  24. Conclusions Numbers small in relation to overall migration Concentrations in certain areas, especially London & SE, Ipswich, Aberdeen—but even there small % of housing markets Reading affordability model suggests very small impact on house prices—(much) less than 1% Greater effect likely to be on rents

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