Migration could drive the increase of real estate prices in Europe
November 9th, 2015
The population is growing rapidly in numerous regions of the European Union, mainly because many seek work in areas that are now accessible to them thanks to the European Union. But the construction industry is falling behind, failing to provide enough new homes, while real estate prices are increasing.
A market is likely to feel the consequences of the most recent wave of migration: hundreds of thousands of migrants and refugees arrived to the EU and many more are on their way. According to experts this can have a great effect on real estate in the mid-term.
There have been numerous studies in recent years regarding the connection between immigration and real estate prices. In New Zealand for example, where a one new estate is built per every six person and immigration is around 1 percent, the growth of population resulted in an 8 percent increase in prices.
But the presence of immigrants can also have a negative effect on prices. In England and Wales for example experts estimate that in regions where the number of immigrants rises prices drop by an average of 2 percent.
Most commonly the immigrants buy cheaper apartments, but if there are a lot of transactions taking place in an area at once it could negatively affect the prices.
Most of the studies however cannot be used as definitive proof that migration affects the market one way or another as they often overlook several factors. Only one thing is certain: that migration does have an effect on the real estate market, and it could bring the construction of new homes. But everything else is subject to the properties of different regions.