[mytailorisrich]

Supply is somewhat constrained and demand is also artificially inflated (at national level it is 100% caused by immigration, which is kept high by the successive governments).

Everyone relies on the property market going up. Beyond the obvious reasons, another important one is that fixed rate mortgages are not fixed for the life of the mortgage but only for, usually, 2 to 5 years after which rates jump so everyone is continuously worried about remortgaging.

[spacebanana7]

It's curious to think about what house prices in the UK would be like without immigration.

With a sustained negative fertility rate over the past few decades, there could've feasibly been stable prices with no new houses built at all.

[mytailorisrich]

The UK population would have started to decrease naturally I believe around 2024 without immigration. It so happens that the past few years have also seen record high immigration and population growth...

Obviously the property market would be looking very differently if population was decreasing. The whole economy would.

[LurkerAtTheGate]

> Obviously the property market would be looking very differently if population was decreasing. The whole economy would.

Isn't this exactly what's happening in Japan? Govt practically giving away mostly rural homes, as owners died without heirs.

[spacebanana7]

> It so happens that the UK population would have started to decrease naturally I believe around 2024 without immigration

I think it would've been much earlier than that. Cumulative net migration since 2000 is around 8.5 million people. So the UK's current population would be radically lower today without immigration.

https://www.statista.com/statistics/283287/net-migration-fig... (annoyingly the per year figures need to be summed up manually on both this and ONS reports)

[immibis]

Are you trying to paint a conspiracy here? It seems like people just move around if they can, and one pressure that drives people away is a lack of housing even worse than other places' lack of housing. If there's less of a lack of housing (relative to how bad it is everywhere else), of course a place becomes more attractive to move to.

[n4r9]

Well, house prices outside of London have increased roughly in line with inflation over the last couple of decades.

ONS data states that the average house price outside of London and the South East rose from £134k in 2005 to £192k in 2019 [0].

The Bank of England's inflation calculator states that £192k in 2019 costs £139k in 2005 [1].

Looking at London specifically, house prices more than doubled from £303k to £684k over the same period [2]. That's a 63% increase in real terms. Immigration would have some effect on this, but so would UK citizens moving to London or foreign nationals buying up property as an investment.

[0] https://www.ons.gov.uk/economy/inflationandpriceindices/adho...

[1] https://www.bankofengland.co.uk/monetary-policy/inflation/in...

[2] https://www.home.co.uk/guides/house_prices_report.htm?locati...

[spacebanana7]

The data actually implies UK citizens have been consistently moving out of London. The absolute white British population in 1971 was 6,500,000 but was only 3,239,281 in 2021 [1].

Of course not all UK citizens are white British, and the negative fertility rate would've applied downward pressure, and it's conceivable that white Londoners emigrated to Australia etc at a higher rate than other parts of the UK. But none of these factors can really explain a 50% decline in population in the same way that internal migration can. It certainly becomes very difficult to reconcile the numbers if any signifiant number of people from predominantly white areas had been moving into London.

I agree with you that most of the change in average UK house prices is driven by London. In a zero immigration scenario it seems likely that London prices would be radically lower with the rest of the country having much less, if any, change.

[1] https://en.wikipedia.org/wiki/Ethnic_groups_in_London

[n4r9]

Yes, London house prices would likely be lower. But we'd also be poorer on average, since immigrants are a net benefit to the economy. Moreover the combination of a starkly aging population with higher costs of labour would cause a real strain on the public purse, like Japan is seeing. On balance I much prefer the current situation. Though I guess I would say that, having an immigrant parent.

[mytailorisrich]

Net benefit to the economy does not mean net benefit to everyone individually.

That's one reason that made people at the lower end of the payscale vote for Brexit: Immigration keeps wages low.

We're also seeing it since Covid: immigration keeps the GDP (barely) growing while the GDP per capita is decreasing.

The cost is wholesale destruction of local culture, too. London is a city in England but no longer really an English city, for example.

[spacebanana7]

I have an immigrant parent too. Also agree the UK - and Europe generally - would be likely in a state of Japanification without migration.

Still, I think it's valuable to understand the economics at play. Especially in a business context.

[fakedang]

I mean, you're already poorer, given that immigration has depressed wages significantly. Post-Brexit, EU immigration was only replaced by non-EU immigration which has a higher tolerance for lower wages and poorer living conditions. Something that I got to see firsthand a couple of weeks back.

[n4r9]

Immigration is thought to have a small negative impact on the wages of low skilled workers, but is probably financially beneficial for those further up the payscale.

> Post-Brexit, EU immigration was only replaced by non-EU immigration

Yes, in fact this was how Brexit was sold to many south Asian voters: your family will have an easier time moving to the UK.