URC Informal Seminar The Impact of Migration on Housing and Local Services in London Christine White

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URC Informal SeminarThe Impact of Migration on
Housing and Local Services in LondonChristine
WhiteheadDepartment of EconomicsMonday 14
January 2008

• Based on work by Ian Gordon, Tony Travers and
  Christine Whitehead

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National Growth in Migration London different

• Gross International Migration 1985-2005 (000s)

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Contrasting Patterns by Area of Origin

• High wage countries (EU, USA, Old Commonwealth,
  Japan / Korea)
• predominantly white
• 38 of recent inflow but only 17 of stock growth
  post-1986
• Large temporary element (1996 entry down 50
  between 1997 and 2005)
• Sensitive to cyclical developments in London
  economy
• Asylum countries (from where asylum seekers are a
  large proportion of the UK inflow)
• ethnically mixed
• 12 of recent inflow but 22 of stock growth
  post-1986
• Delays in entering mainstream housing/labour
  markets and surveys
• Smaller temporary element (1995 entry down 37
  between 1997 and 2005)
• Flows driven by push factors, plus perceptions of
  control tightness
• Other low wage origins (developing and transition
  countries)
• also ethnically mixed
• 51 of recent inflow but 62 of stock growth
  post-1986
• Small temporary element (1996 entry down 16
  between 1997 and 2005)
• Not evidently sensitive to state of the London
  economy
• A8 countries (inc. Poland) as a sub-set but not
  particularly concentrated in London
• All three groups show more education than the
  average Londoner but comparable with similarly
  young natives

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Immediate Impacts on Job Market

• all types lower skilled jobs than apparent
  skills
• distinguish training from (lack of) networks
  constrained opportunities discrimination
• lower end of market signs that wages held down

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Long Term Impacts on London Population Structure

• These differ from the immediate impact for three
  reasons
• The likelihood of some migrants returning or
  moving on
• Flows of temporary migrants generate a one-off
  increase (and change population composition) but
  do not produce continuing growth
• Flows of permanent migrants (only) produce
  continuing growth
• Displacement effects on other Londoners
• May include a white/established household
  flight element
• But driven by growing gap between space demands
  and availability
• Effect is nearer 1 for two rather than 1 for 1
  because (effective) space demands of new
  immigrants are less than of average Londoner
• If this doesnt persist then the impact on London
  population would be a step increase, not
  continuing growth
• Child-bearing by a younger migrant population
  (20-44) peaking 10 years after arrival

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Domestic Flows to/from London Mirror
International Flows
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Effects on Household Numbers and Housing Demand

• The number of households in London is projected
  to increase by between 30,000 and 35,000 each
  year until 2026
• Almost two thirds of this total is linked to
  international inmigration even though the
  majority of housing demand from net inmigration
  is offset by leakages to the rest of the country
• Projected additional supply cannot keep pace with
  the expansion in the number of households -
  currently still below 20,000 per annum although
  aiming to rise to 30,000 - so housing pressures
  are expected to continue to increase
• However, migrant households tend to make fewer
  demands on the available housing than equivalent
  indigenous households

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Why less impact?

• New migrants form fewer households than their
  local counterparts
• They also consume less housing taking account of
  incomes and household type
• Moreover they are far more likely to live in
  privately rented accommodation
• where average densities are higher
• Over time housing demands tend towards those of
  the indigenous population
• so overall impact on housing demand depends on
  how long migrants stay in the country
• if there is significant turnover their demands
  remain lower
• if they stay their demands are very similar to
  the average

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Ratios of Household Reference Persons to Total
Private Household Population England 2002 to
2005
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Tenure Mix of London Residents by Migration,
Origin and Time in the UK
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Impact on house prices

• Housing demand over the last few years has been
  very buoyant
• but this is not just because of inmigration.
• much of the demand comes from increasing incomes
  and from growing investment demand both
  corporate and individual
• including from those not domiciled in the UK
• Including investment in buy to Let in part an
  outcome ofhealthy migrant market
• As a result house prices have been rising faster
  than in the rest of the country.
• the user cost of owner-occupation has increased
  by more than 150
• putting owner-occupation out of the reach of many
  younger and lower income households

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Mix- adjusted house prices 1999-2006
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Impact on the private rented sector

• Much of the increased demand from migrants goes
  into the private rented sector
• but rents have not been rising very rapidly,
  especially not in the East and South East of the
  capital.
• Partly an outcome of increasing supply from Buy
  to Let and other investors.
• also probably reflects higher densities and
  perhaps lower quality in part of the market
• though no detailed evidence on this except at the
  very bottom of the market

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Rents and user costs of housing, London 1996 -
2005
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Migration and the social rented sector

• Since 2000 asylum seekers and refugees who
  require assistance with their accommodation are
  now initially housed outside the capital so put
  no direct pressure on the housing system
• The vast majority of other migrants would not be
  classified as in priority need so would be
  unlikely to be eligible for social housing. Even
  if they were classified as homeless they would
  probably be housed in temporary accommodation
  outside the capital.

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Migration and the social rented sector (2)

• However over time the situation changes - and to
  the extent that migrants remain on low incomes
  and are poorly housed they may well become
  eligible for social housing although their
  chances of getting it are still constrained by
  lack of supply
• Inmigrant households who came to London more than
  3 years ago from asylum and other poor countries
  are disproportionately in the social sector
• The needs of poorer imigrant households are
  expected to increase over the next decade to
  the point where one GLA estimate suggests that up
  to 70 of identified needs for additional social
  housing will come from migrants
• Competition for housing is seen as one of the
  most important areas of tension between
  established households and new entrants whether
  they be from abroad or elsewhere in the country

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Bringing the housing picture together

• The initial impact of a migrant household is less
  than that of an established household
• Migrant households make better use of the
  existing stock and the private rented sector is
  coping reasonably well
• House price rises are partly the result of demand
  from migrants but there are many other factors
  latterly particularly international and Buy to
  Let investment demand
• The most negative effects are on social housing
  requirements and the tensions generated by
  competition for the very limited supply of social
  housing

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Migrants use of public services

• The majority of international inmigrants
  especially those who stay short periods use
  relatively fewer public services than indigenous
  households with the same attributes and help to
  make areas with high concentrations of particular
  groups more diverse
• There are however additional pressures from the
  more vulnerable groups
• costs associated with high turnover and lack of
  knowledge of system costs of translation large
  families education the very vulnerable
• and costs of public services in London have
  increased as a result
• tensions show where services in short supply
  notably housing problem perceived as incomers
  (and sometimes ethnicity) rather than migration
  as such?
• Central government often does not fully
  underwrite the costs of these additional services
• Puts further pressure on local authorities and
  social cohesion.
• This situation could worsen if there is a long
  term mismatch between financial resources and
  spending needs

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Conclusions

• London has experienced a step change in
  international migration which looks set to
  continue even if the economy slows down
• The make up of the migrant population is
  particularly important especially in terms of
  length of stay (special case of A8s?)
• Inmigration appear to have put less upward
  pressure on private rents than might be expected
• The pressures on house prices are broader
  income growth investment as well as household
  numbers migrants relevant but less demand than
  equivalent indigenous households
• The short term impact on social housing in London
  very limited but longer term needs could be a
  large part of future requirements especially
  for family accommodation (also education)
• Overall London is becoming much more diverse
• this inherently generates some social tensions,
  notably because of competition for scarce public
  services
• but at the same time it is helping to break up
  existing concentrations of particular minorities