Is immigration impacting worldwide property prices?

Over the last few weeks we have seen the UK government complaining about immigration numbers, the Australian authorities introduce a $1500 fee per property for foreign investors and there are many other concerns around the world about immigration and property prices. The UK is perhaps one property market which has “suffered” from immigration numbers which the government is struggling to control despite an array of promises to the electorate.

We say “suffering” from immigration numbers because in times of trouble it is very often overseas investors and those moving to the UK that have helped to support the market. As a consequence, is it really fair to say that immigration is negatively impacting property prices around the world?

Popular expat destinations

In the UK it is many of the larger cities which tend to attract more immigrants and expats who very often have a significant impact upon the local property market. There are numerous examples of property prices and rents increasing in these heavily populated areas due to higher than expected demand and limited availability. In many ways, as we have seen time and time again in the past, these situations fuel further investment from buy to let investors thereby pushing prices higher and forcing more people to rent. The start of a vicious circle!

Quote from PropertyForum.com: “Do politicians use real estate markets as cash cows?”

Opponents of the U.K.’s immigration system will suggest that benefit payments are attracting more than the UK’s fair share of immigrants. Whether or not this is true is certainly a bone of contention although being part of the European Union does open up every member nation to free movement within the European Union.

Does the fault lay with local governments?

You could argue that governments around the world, perhaps more predominantly the UK, have miscalculated the number of immigrants moving to start a new life. In reality it is very difficult to forecast how many people will move from within the European Union and outside of the European Union. However, perhaps we are missing the wider picture and offering governments a get out of jail free card?

The fact remains that many governments around the world have significantly underinvested in new property builds using redtape and planning regulations to control numbers. Time and time again critics in the UK in particular have highlighted the hundreds of thousands of additional properties required to bring the market back on an even keel. This is something which governments have been well aware of for many decades now, across all political parties, although they seem happy stifling supply and feeding demand?

Is property the key to political success?

The vast majority of homeowners in the UK will be heavily influenced by the success which the government of the day has in retaining and increasing real estate values. We may not like this, some of us may not believe this but the fact remains that the vast majority of individual wealth is either directly or indirectly associated with the real estate market. The influx of immigrants across some of the more boisterous property markets has added further fuel to the fire but the reality is that there have been underlying supply issues for many years which have been ignored.

Will governments now look to increase the supply of new homes, better control immigration and hopefully bring local property markets back into the real world?