Migration Watch UK – Written evidence (EHM0149)

Immigration and Housing

Summary

1.  Discussion of the housing crisis has generally focussed very largely on supply while the factors behind demand have often been ignored.  The average household size has changed little since the early 1990s so population growth is the key driver of household growth and immigration is the key driver of population; in recent years two thirds of the additional households have had a foreign born head.

Detail

2.  The Office for National Statistics (ONS) estimate that, between 2000 and 2014, two-thirds of the growth in households in the UK has been from households with a foreign born Household Reference Person[i]. The same figures show that in recent years there has been a marked acceleration in the proportion of additional new households that had a foreign-born HRP

Table 1: Proportion of additional households in UK with a foreign born HRP

3. Looking forward, an estimate of household growth can be deduced from the ONS population projections for the UK which are revised every two years. 

4. The level of net migration is the main variable in future population growth.  The latest ONS principal projection, produced in 2014, has a long-term assumption that net migration will be 185,000 per annum. There are also variant projections with a ‘high’ net migration assumption of 265,000 and a ‘low’ assumption of 105,000 together with a projection based on zero net migration.  They are illustrated in the graph below.

Figure 1: ONS Population projections at various levels of net migration

5. The zero net migration projection can be compared with the other projections to give an estimate of the impact of future net migration on population growth.   Under this latest principal projection of 185,000 per annum, 68% of projected population growth is as a result of future migration[ii].

6. However, this immigration assumption already looks very low.  Net migration has averaged 242,000 over the last ten years and the latest figure for net migration to June 2015 is 330,000.  The Committee might therefore like to consider the impact of the higher net migration scenario of 265,000 on future housing demand and even, perhaps, the current level of a third of a million.

7. Household projections, although based on the ONS population projections, are currently the responsibility of the Department of Communities and local Government and are produced every four years or so.  The latest variant household projections (for England) were published in December 2015.  (They were, however, based on the 2012 ONS population projections).   Their zero net migration scenario produced 95,000 fewer households per year than their variant projection based on net migration of 225,000 per year so, under the latter projection, 40% of the total projected household formation will be due to future immigration.

8. This projection contrasts sharply with the 66% which actually seems to have occurred (see paragraph 2). The DCLG give very little detail as to how they arrive at their projections but they have clearly used obsolete projections and very low assumptions.  The Committee may wish to explore this significant gap.

9. It will be apparent from the foregoing that immigration is a major factor in housing demand; it is also the only factor over which the government can have any significant influence.  This is never given prominence in government publications, indeed it is seldom mentioned in the context of housing.   That may explain why the impact of immigration on housing demand does not seem to be generally understood.  We believe, therefore, that it is important that the Committee’s report should give it the attention that it deserves.

13 January 2016