Supplementary memorandum by MigrationWatch
UK on Housing
1. The recently revealed inflexibility of
housing supply and a major increase in the immigration projection
point to even greater pressures on the housing market, especially
for first time buyers who will face still higher prices.
2. An independent report just published
by H M Treasury[75]
examined the reasons for the under supply of housing in the UK.
It suggested that we need to build an extra 39,000 houses per
year, even without allowing for the replacement of the existing
housing stock. It found that there was a weak response of housing
supply to changes in demand. It continued "higher demand
therefore tends to be translated into higher house prices rather
than increased output of houses."
3. The report dealt only with supply. Its
estimates of demand were based on a seven year old population
projection.[76]
International migration is nowadays a major factor in household
projections. Indeed, these projections indicated that, over a
25 year period, a variation of + 40,000 on net migration would
add about 450,000 new households—or 18,000 a year[77].
4. Net migration in1996 was projected at
65,000 per year, thus accounting for 29,000 of the 39,000 shortfall
estimated by the Barker Report. However, the latest official projection
for net immigration is 103,000 per year[78].
The extra 38, 000 immigrants translate, on the same basis, into
an additional housing requirement of 17,000 per year. This suggests
a shortfall in housing of about 56,000 a year (39 + 17), about
80% of it due to net inward migration.
5. The picture would, of course be even
worse if the projection turned out to be an underestimate and
net immigration continued at the average level for the last five
years of about 158,000 a year (excluding illegal immigrants).
In this case the housing shortfall would be a further 25,000 bringing
the total shortfall to 81,000 a year, 87% due to net migration,
with a corresponding effect on house prices.
16 November 2007
75 Review of Housing Supply, Interim Report. Kate Barker.
December 2003 Back
76
Ibid page 40 footnote 3. Household demand was based on the 1996
population projections. Back
77
Housing statistics: Projections of households in England 2021-Office
of the Deputy Prime Minister-Table G7 Back
78
issued on 18 Dec 2003 Back
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