The UK housing crisis has been a hot-button issue for decades, with house prices reaching their least affordable levels since the 19th century, according to investment group Schroders. While many blame record-high immigration for the surge in housing demand, the real issue lies closer to home. The true driver of the crisis is internal migration—Britons moving from one part of the country to another, particularly from London to other regions. Here’s a deep dive into why internal migration, not immigration, is fueling the housing crisis.
Table of Contents
The Immigration Myth: Why Foreigners Aren’t to Blame
Immigration and Housing Demand
At first glance, it seems logical to blame immigration for rising house prices. A growing population means more demand for housing, which should push prices up. However, the data tells a different story.
- Rental Market Impact: Immigration has indeed increased demand in the rental sector. Analysis by Capital Economics shows that in the two years to June 2023, rents rose 11% higher than they otherwise would have, due to immigrants creating an additional 430,000 households.
- Homeownership Disparity: Immigrants are far less likely to own homes compared to UK-born residents. In 2021, only 43% of non-UK-born people in England and Wales owned their homes, compared to 67% of UK-born residents, according to the Migration Observatory.
- House Price Trends: Despite record immigration levels in 2023, house prices fell for the first time since 2008, according to Nationwide. This contradicts the theory that immigration drives up property prices.
London’s Immigrant Population
London is home to two-fifths of the UK’s immigrants, yet it is projected to be the weakest-performing region for house price growth over the next five years, according to estate agent Savills. If immigration were the primary driver of house price inflation, London would be experiencing a housing boom—but it’s not.
State Pension Back Payments: Women in Their 60s and 70s Could Receive Nearly £8,000 by Year-End
DWP Confirms No Plans for New £301 Cost of Living Payments—What It Means for Struggling Households
The Real Culprit: Internal Migration
Wealth Concentration in London
The root of the housing crisis lies in the concentration of wealth in London. During the economic boom of the 1990s and 2000s, London’s wages and wealth grew rapidly, far outpacing the rest of the country. Combined with falling interest rates, which made borrowing more accessible, this caused house prices in the capital to skyrocket.
- House Price Growth: The average home price in London rose from £65,000 in 1992 to £488,000 in 2017, a staggering 650% increase, according to Land Registry data. Over the same period, the FTSE 100 index grew by just 170%.
The Exodus from London
As London property prices soared, many homeowners decided to cash in on their gains and move to more affordable regions. This internal migration has had a ripple effect on house prices across the UK.
- Moving Patterns: Between 2014 and 2019, an average of 104,000 people per year left London for other parts of the UK, according to Centre for Cities. Initially, they moved just beyond city limits, but over time, they ventured further afield in search of better value.
- Distance Travelled: In 2009, London leavers moved an average of 22.8 miles from the city. By 2024, this distance had doubled to 45.4 miles, with many heading to the North and Scotland.
The North-South Divide: How Internal Migration Spread the Crisis
Southerners Moving North
The migration of Londoners to other regions has significantly impacted house prices outside the capital.
- Buyer Trends: In 2009, only 2% of home buyers were Southerners moving North, while 6.2% were Northerners heading South, according to Hamptons. By 2024, these numbers had flipped: 4.6% of buyers were Southerners moving North, while just 2.3% were Northerners heading South.
- House Price Growth: The influx of wealth from London has driven up house prices in the North and Scotland. Between 2020 and 2022, annual price growth in the North soared by up to 17%, with Scotland not far behind.
Regional Price Trends
- 2013-2016: London saw the steepest price increases, with annual growth ranging from 6% to over 20%. The South of England also recorded strong growth, while the North and Scotland struggled to exceed 5%.
- 2020-2022: The pandemic accelerated the exodus from London, with the South outpacing the capital’s price growth. The North and Scotland saw annual price growth soar, reaching up to 17%.
The Future of the UK Housing Market
Continued Dominance of the North and Scotland
Savills forecasts that the North West and Scotland will lead the UK in house price growth over the next five years, with increases of 29.4% and 25.8%, respectively. In contrast, London is expected to see growth of just 17.1%.
Mortgage Rates and Market Dynamics
With 1.8 million fixed-rate mortgage deals set to end in 2024, according to UK Finance, many homeowners may be forced to sell or downsize. This could further fuel internal migration as Londoners continue to cash in on their property gains and move to cheaper regions.
£200 Cost of Living Payments: When Will They Hit Your Bank in 2025?
Over a Million Taxpayers Miss Deadline: What Happens Next and How to Avoid Penalties
Carer’s Allowance 2025: Eligibility, How to Claim, and Payment Details
Key Takeaways: What’s Really Driving the Housing Crisis
- Immigration’s Limited Impact: While immigration has increased rental demand, it has not significantly driven up house prices.
- Internal Migration’s Role: The movement of wealth from London to other regions is the primary driver of the housing crisis.
- Regional Disparities: The North and Scotland are now experiencing the strongest house price growth, fueled by internal migration.
By understanding the true drivers of the UK housing crisis, policymakers and individuals alike can better address the challenges ahead. While immigration often takes the blame, the real issue lies in the internal migration of wealth from London to other regions—a trend that shows no signs of slowing down.
Leave a Reply