Housing & Immigration

The Truth About House Prices and Immigration: A Deeper Look at the UK Housing Crisis

Nigel Farage, leader of Reform UK, recently claimed that “immigration is the real reason for the housing crisis,” stating that Britain needs to “build a new house every two minutes” to accommodate legal migrants. His comments echo growing public frustration as homeownership becomes increasingly out of reach for many across the country.

But while immigration may be part of the conversation, pinning the crisis solely on migrants overlooks the much broader — and longer-standing — issues that have shaped the UK’s housing market.

A Housing Crisis Built Over Decades

The roots of the housing crisis lie not in recent population changes, but in a historic failure to build enough homes. According to the Centre for Cities, Britain has a deficit of 4.3 million homes — a shortfall that has been accumulating since 1945. To put that into perspective, it’s the equivalent of building another London.

Successive governments have failed to meet their own housebuilding targets. Even the target of 300,000 homes a year for England, already seen as ambitious, was based on net migration figures that were significantly lower than reality. To keep pace with both existing demand and population growth, the UK would have needed to build over 500,000 homes annually in recent years — far more than it has achieved.

The Planning System and Land Policy

Another central challenge is the UK’s highly restrictive and discretionary planning system. Unlike many countries with clear zoning regulations, the UK’s approach allows local authorities wide latitude to block developments, creating uncertainty and slowing construction.

The Green Belt — land protected from development to limit urban sprawl — now covers 13% of England, often in areas near high-demand cities. While originally intended to preserve natural beauty, critics argue it now acts as a major barrier to addressing housing shortages where they’re most acute.

Both Labour and Conservative parties have suggested reforms to the Green Belt and planning system, but detailed, actionable policies remain scarce.

What Role Does Immigration Really Play?

Immigration undeniably increases demand for housing, especially rental properties in urban centres. Net migration stood at 685,000 in 2023, and analysis by Capital Economics estimates that immigration added 430,000 renting households between 2021 and 2023.

This additional demand has contributed to rising rents, which grew by 30% between mid-2021 and early 2024 — nearly double the pace of wage growth. However, this pressure is more evident in the rental sector than in house prices.

Homeownership rates among migrants remain significantly lower: just 47% of migrants own their homes, compared to 70% of UK-born residents. Most new arrivals rent during their initial years in the country.

While it’s fair to say that migration places pressure on housing infrastructure, experts argue that this pressure would be manageable if the UK had a planning and construction system capable of responding effectively.

Economic Forces at Work

Critically, the UK’s housing affordability crisis has also been driven by economic and policy decisions unrelated to immigration.

Real incomes steadily increased through the 1980s to 2000s, enabling people to spend more on housing. Government schemes such as Help to Buy boosted demand further — but did little to increase supply. As a result, house prices soared.

The era of cheap borrowing also played a major role. Mortgage rates fell from over 5% in 2010 to under 2% by 2021, enabling buyers to take on larger loans and pushing prices even higher. With rates rising again post-2022, affordability has worsened, especially for first-time buyers.

Sympathy for Migrants — and Struggling Families Alike

It’s vital to distinguish between those who migrate to the UK in search of safety, opportunity, and contribution — and those who might seek to exploit the system. Most of the migrant’s work, pay taxes, and support the economy. Many of them work in key sectors such as health care, logistics, and construction — the very industries we rely on to build homes and support communities.

At the same time, it’s understandable that families who’ve lived in the UK for generations feel let down when they can’t afford a home, or when local infrastructure feels stretched. Both truths can coexist. We need solutions that address the needs of all residents — long-time citizens and newcomers alike.

Conclusion: A Crisis of Supply, Not Just Demographics

The housing crisis is complex, and while immigration contributes to housing demand, it is not the root cause. A chronic lack of supply, outdated planning laws, and misguided economic policies have had a far greater impact on affordability and availability.

Farage is not wrong to raise questions about how migration impacts housing — but to suggest it’s the main cause oversimplifies a deeply layered issue.

Ultimately, solving the housing crisis means building more homes, modernising planning rules, and creating a system that works for everyone — no matter where they’re from.