As we approach D-Day for the UK referendum on continued membership of the European Union many are starting to ask whether immigration really has any impact upon property markets. Depending upon which side you listen to, immigration is seen as extremely positive or extremely negative with very few comments in between. However, for those looking to invest in property in the UK, is immigration positive or negative?
We have no bias either way so unlike many parties with their feet firmly in one camp or another we can gave a balanced view.
Demand for property
If we take a step back and look at immigration and the UK from a distance the simple fact is that the more people living in the UK the more demand for property. This property may be private housing, council housing or some form of housing association accommodation but quite simply, the more people living in the UK the more homes are required. There is no real argument to this debate with demand magnified even further by a growing domestic population.
Employment in the UK
There has been much debate about employment in the UK but current employment levels are running very healthy especially when compared to European counterparts. The introduction of a significant overseas workforce into the UK employment market seems to have been relatively positive. True, there could be downward pressure on hourly rates in some areas of the economy but the introduction of the minimum wage and the so-called living wage offer significant protection to employees.
If you look at this from a distance, the more employment in the UK, the more money to spend within the UK economy which itself breeds growth and further jobs. The stronger the employment market, the more people able to look towards private rental or even the purchase of property. Surely a positive for property demand?
Increased tax income
Whether opponents of the European Union like it or not there is no doubt that the vast majority of Europeans moving to the UK for employment more than pay their way in relation to taxation. This increased tax revenue has supported a growing UK welfare budget and also helped to fund public services up and down the country. The sudden increase in demand for some public services has caught many UK councils unprepared but in the long term again this will feed back into the UK employment market.
At a time when the UK budget is still stretched, but better than the majority of European counterparts, any increase in tax income is certainly most welcome. In theory this should allow further infrastructure spending which improves the employment situation and creates wealth which could find its way into the UK property market.
In reality there is very little downside for the UK property market when looking at the subject of immigration, which is very much in the press at the moment. On a wider scale, perhaps the only downside is the fact that increased demand for one property market will likely lead to reduced demand for another property market(s). Free movement across Europe for all Europeans may not be as positive for other areas of life but any increase in demand for property in the UK, wherever that comes from, is advantageous for property investors.