Do migrants push up house prices?

CLAPTON

Generali wrote: »

Marshall on demand:

http://www.econlib.org/library/Marshall/marP11.html#Bk.III,Ch.III

are you claiming that Marshall would agree with your about this nonsense

The reason they (Ferraris) are expensive is that supply is also low.

and are you claiming that Marshall would agree with you that the 3 or so million renters in London have no impact on the price of houses?
or put it another way if the population of London had 3 or so million people less renting, it would not impact on price of property.

Generali

CLAPTON wrote: »

are you claiming that Marshall would agree with your about this nonsense

Ferrari makes about 7,000 cars a year versus Toyota that makes the best part of 9,000,000.


http://www.jamesallenonf1.com/2013/05/ferrari-to-cut-production-of-road-cars-to-protect-exclusivity-of-brand/

http://www.toyota-global.com/company/profile/figures/vehicle_production_sales_and_exports_by_region.html

Yeah, I think it's fair to say that the supply of Ferraris is low.

If you want to argue with Alfred Marshall about what constitutes demand you missed your chance as he unfortunately died in the 1920s. Still demand remains a function of those willing and able to pay for something. Demand for Ferraris is low as is supply.

CLAPTON

Generali wrote: »

Ferrari makes about 7,000 cars a year versus Toyota that makes the best part of 9,000,000.


http://www.jamesallenonf1.com/2013/05/ferrari-to-cut-production-of-road-cars-to-protect-exclusivity-of-brand/

http://www.toyota-global.com/company/profile/figures/vehicle_production_sales_and_exports_by_region.html

Yeah, I think it's fair to say that the supply of Ferraris is low.

If you want to argue with Alfred Marshall about what constitutes demand you missed your chance as he unfortunately died in the 1920s. Still demand remains a function of those willing and able to pay for something. Demand for Ferraris is low as is supply.

some idiot posted

The reason they (Ferraris) are expensive is that supply is also low.

This provides a causal explanation as to why Ferraris are expensive which is of course WRONG. That doesn't mean that Ferrrari aren't expensive and it does mean that the supply is low : what it means is that there is not a causal relationship between them


Although I know what Marshall would have said, I accept that you couldn't know that so I'll have to listen to what you say instead


do you think that the 3 million or so renters in London affect the price of property in any way at all?

westernpromise

cells wrote: »

Why just London why does the idea not apply to say the North or Midlands or Wales? all of which have taken a lot of migrants since 2004 and the population of the UK is up by about 5 million yet those regions are cheaper now than in 2004 when the eastern Europeans got free movement

It's the different quality of money that's coming into the one region versus the other.

In London, the types of job that people come to this country to do are high-paying and tend to capture for London a greater share of the global wealth that is available from that particular industry. Whether it’s advertising, architecture, IT, management consulting, art, commodities, theatre, music, financial services or whatever, there’s an international market for it, and London has been bagging a bigger and bigger slice of that market from competing world cities for 20 years now. The bigger London gets, the bigger it continues to get.

The industries that attract migrants to other parts of the country, frankly, do not do this. Latvian immigrants arriving to pick fruit in Derbyshire or deliver pizzas in Batley aren’t going to add to the sum of local wealth except via benefits transfer from the south-east. There aren’t many world-class industries in Northampton just waiting for their influx of skilled German, French and Spanish immigrants to really mobilise Northampton’s potential, and turn it into the London of the north. And yes, I place Northampton in the north advisedly; if you’re so far north of London that nobody in their right mind would do the commute - you live in the north.

There is a place in Switzerland called Zug. It is in a canton of Switzerland that offers favourable tax treatment to international firms. It has a population of around 27,000. It’s also the headquarters of 27,000 companies - that’s one per occupant.
https://www.theguardian.com/business/2008/may/31/taxavoidance.tax

If you want a 4-room (i.e. 2 bed 2 reception) property in Zug you’re looking at around £660,000:
http://www.homegate.ch/buy/house/canton-zug/matching-list?ac=4&ad=5&tab=list

- and don’t forget that this price is even though foreigners can’t buy property in Switzerland. They rent, and the rental demand from all those oil and metal traders flows straight into capital values. Just like rental demand in London pushes up the price landlords and owner-occupiers have to pay, essentially. London prices prevail, in both London and Zug.

So Zug has the HQ of Glencore, and Northampton has the HQ of 99p Stores Limited. Says it all.

This, I suggest, is why you can have 0.5% interest rates in Bolton and sub-inflation house price inflation over 20 years, while having quite different outcomes in London given the same interest rates. There is a wall of smart people pouring into London, and they’ve got to live somewhere. And property prices everywhere else are simply a differential to London.

Generali

CLAPTON wrote: »

some idiot posted



This provides a causal explanation as to why Ferraris are expensive which is of course WRONG. That doesn't mean that Ferrrari aren't expensive and it does mean that the supply is low : what it means is that there is not a causal relationship between them


Although I know what Marshall would have said, I accept that you couldn't know that so I'll have to listen to what you say instead


do you think that the 3 million or so renters in London affect the price of property in any way at all?

So the price of Ferraris isn't set by supply and demand in your opinion. What sets the price then?

cells

westernpromise wrote: »

It's the different quality of money that's coming into the one region versus the other.

In London, the types of job that people come to this country to do are high-paying and tend to capture for London a greater share of the global wealth that is available from that particular industry. Whether it’s advertising, architecture, IT, management consulting, art, commodities, theatre, music, financial services or whatever, there’s an international market for it, and London has been bagging a bigger and bigger slice of that market from competing world cities for 20 years now. The bigger London gets, the bigger it continues to get.

The industries that attract migrants to other parts of the country, frankly, do not do this. Latvian immigrants arriving to pick fruit in Derbyshire or deliver pizzas in Batley aren’t going to add to the sum of local wealth except via benefits transfer from the south-east. There aren’t many world-class industries in Northampton just waiting for their influx of skilled German, French and Spanish immigrants to really mobilise Northampton’s potential, and turn it into the London of the north. And yes, I place Northampton in the north advisedly; if you’re so far north of London that nobody in their right mind would do the commute - you live in the north.

There is a place in Switzerland called Zug. It is in a canton of Switzerland that offers favourable tax treatment to international firms. It has a population of around 27,000. It’s also the headquarters of 27,000 companies - that’s one per occupant.
https://www.theguardian.com/business/2008/may/31/taxavoidance.tax

If you want a 4-room (i.e. 2 bed 2 reception) property in Zug you’re looking at around £660,000:
http://www.homegate.ch/buy/house/canton-zug/matching-list?ac=4&ad=5&tab=list

- and don’t forget that this price is even though foreigners can’t buy property in Switzerland. They rent, and the rental demand from all those oil and metal traders flows straight into capital values. Just like rental demand in London pushes up the price landlords and owner-occupiers have to pay, essentially. London prices prevail, in both London and Zug.

So Zug has the HQ of Glencore, and Northampton has the HQ of 99p Stores Limited. Says it all.

This, I suggest, is why you can have 0.5% interest rates in Bolton and sub-inflation house price inflation over 20 years, while having quite different outcomes in London given the same interest rates. There is a wall of smart people pouring into London, and they’ve got to live somewhere. And property prices everywhere else are simply a differential to London.

or more simply, London GDP growth has been stronger much stronger over the last 20 years v the other regions and the same is expected over the next 20 years. That drove London prices higher and should in theory drive them higher yet over the next 20 years v rUK assuming the golden goose of finance and legal is not strangled by something like a Brexit or other unforeseen

There is also the factor of rich people wanting to live in expensive homes. If someone earns £500k a year they are not going to go buy a £100k house even if its decent. They are going to look to buy a £1.5m plus home as people tend to want to live in the best home they can afford. Even if they buy a 'sub standard' home in say Hackney for £1m they may well spend another £500k+ on extending and refurbishing it.

Everything points to two strongly diverging and different markets. London (especially inner London) v the rest. Yet policy and debate dont really reflect this.

So does migration push house prices up? Maybe but not by much

dktreesea

MatthewAinsworth wrote: »

There's a reluctance to build between 1- government not wanting to 'ruin the environment' or slow house prices (a crash would cause banks to fold and 2 - developers holding onto land for prices to rise

Therefore anything that boosts population will boost prices

I suspect the governments reluctance to slow house prices, especially in England, has more to do with their not wanting to invest, or rather fund local authorities to invest, in social housing, combined with the large part imputed rents (as opposed to real rents) play in the calculation of the GDP. Since imputed rents (the rent the government say would be achievable for a property were it rent out rather than owner occupied) are a function of the value of the property, the last thing the government would want to do is take action that would bring the value of property overall down.


In Scotland, you get a much more responsible attitude to rents and the BTL brigade, with investment in thousands of new social homes a year, in part to stop BTLers capitalising on renters (i.e. charging exorbitant rents) being unable to afford to buy their own home.


I doubt if this will have the desired effect, of muting rises in house prices, in Edinburgh because our population is soaring and has been for the last ten years. But across Scotland this strategy seems to be more successful, e.g. the commuter belt area of Lanarkshire, where prices remain affordable to buy.


If this kind of policy https://www.pressandjournal.co.uk/fp/news/highlands/730361/north-social-housing-society-announce-plans-for-700-new-homes-in-five-years/
were practised in England, even if we didn't see falling prices (we should but the population of England grows so fast) at least the upwards pressure on rents might ease.

CLAPTON

Generali wrote: »

So the price of Ferraris isn't set by supply and demand in your opinion. What sets the price then?

The interplay of Supply and demand set the price is SOME circumstances.

Let me say it again so Hamish can read it too

The interplay of supply and demand set the price in SOME circumstances.

The key and substantive issue here is whether or not the 3 million or so people who rent in London have any effect of the price of property there?

The secondary issue (but we can ignore it if you're embarrassed) is to acknowledge that the following is false

The reason they (Ferraris) are expensive is that supply is also low.

Generali

CLAPTON wrote: »

The interplay of Supply and demand set the price is SOME circumstances.

Let me say it again so Hamish can read it too

The interplay of supply and demand set the price in SOME circumstances.

The key and substantive issue here is whether or not the 3 million or so people who rent in London have any effect of the price of property there?

The secondary issue (but we can ignore it if you're embarrassed) is to acknowledge that the following is false

So what's setting the price of Ferraris then? The price fairy?

You're making something of a fool of yourself here.

CLAPTON

Generali wrote: »

So what's setting the price of Ferraris then? The price fairy?

You're making something of a fool of yourself here.

OK so you are refusing to discuss whether 3 million renters in London affect house prices : I'll let you off on the nonsense

The reason they (Ferraris) are expensive is that supply is also low.

as I will charitably assume you were drinking and now feel a bit embarrassed.

There is a decent amount about how prices are set for 'luxury' or unique goods to be found in the economic literature of even by using one's brains cells.

The 'supply and demand set prices' is true in a limited set of circumstances : usually requiring multiple buyers and multiple sellers is a relatively free market. The classic economic text book often use grain or some undifferentiated products to illustrate the principles how prices converge on a small price range.

High value goods are priced, not according to the competition but rather by where the supplier wants to target their sales and by consideration of how they can maximise their (semi) monopoly position.
They have the luxury of limiting supply but charging a higher price for scarcity value.
Apple prices their computers at a premium as it was a 'unique' product, similarly with their phones/tablets etc

Ticket for cup finals and pop concerts and similar products where supply and demand do not directly determine price.

All this is not to say the the supply and demand and price don't have some interplay.

I know this is a bit complicated but you will be able to find economics tuition blogs on the internet or maybe buy an economics book.

google is your friend.