Migration and housing crisis in Europe

How does migration cause a housing crisis?

Immigrant workers make up a significant portion of the construction workforce, which can help alleviate shortages and improve housing costs. In many cases, illegal immigrants also work in the construction industry, accepting lower wages and giving up social security and health care. At the same time, their presence increases demand for housing, thereby aggravating the housing crisis. In addition to migration, other complicating factors include changes in housing preferences, difficulties in the procurement, transport, and availability of building materials and products, increased mortgage interest rates, urban planning regulations, the lack of available homes, the government’s inability to provide affordable housing and rental properties, and investor tax breaks that have turned the housing market into a playground for speculators. Immigrants form the main source of housing demand in countries with high net migration rates, particularly in terms of rental housing. Immigrants typically favour regions with stable economic growth, such as those close to major industrial or commercial centres, which further increases demand in places that have long struggled with severe housing shortages.[1]

A 2006 study published in the Journal of Urban Economics found a correlation between 1% growth in a city’s immigrant population and a 1% increase in rent and housing costs.[2] A more recent study from the Washington-based Urban Institute in 2017 showed a stronger effect, finding that a 1% increase in the immigrant population in surrounding metropolitan areas increases rents by 1.6% and property prices by 9.6%. The 2017 study describes that when immigrants move to metropolitan areas, original residents tend to move to the suburbs, creating a housing shortage there as well. This process encourages price increases in both cases. Globally, most urban sociological research agrees that there is a positive correlation between housing index trends and immigration flows.[3] Attention must be drawn to the slowness of investments, as opposed to the immediacy of demand (in the event of a migration shock, as in Sweden and Germany after 2015), since the tens or hundreds of thousands of migrants arriving, which is typical in most countries in Western Europe, need housing from the first day of their arrival.

The situation in the Netherlands

According to Statistics Netherlands, the Dutch population has grown by approximately one million (5-6%) over the past ten years, mainly due to net migration, to approximately 18 million (currently 18,449,400, compared to 16,655,799 in 2011).[4] The total area of the country is 41,865 square kilometers, so demographic pressure is a real problem, with 520 people living per square kilometer (the Netherlands ranks 26^th in the world in terms of population density). Furthermore, climate change has caused sea levels to rise in the Netherlands, reducing the amount of available land and making protection more expensive.[5]

The housing crisis in the Netherlands has reached dramatic dimensions in recent years. According to a Euronews report from December 2024, rents rose by an average of 5.4% year on year in July 2024, the largest increase in rents since 1993, while the country has a shortage of approximately 401,000 homes. The average waiting time for social housing is seven years, but in cities with higher demand, it can be even longer.[6] The seriousness of the situation is well illustrated by a story published by The World in May 2024, according to which Benjamin Caton, a 27-year-old Dutch citizen, was forced to move 14 times in three years in Amsterdam. A simple one-bedroom apartment in the city costs at least USD 1,300 per month, while the net salary of middle-income earners is around USD 2,400 per month, and an average house currently costs around USD 500,000 – ten times the average Dutch salary.[7] According to a February 2025 report by Bloomberg, the crisis has become so severe that between September 2024 and January 2025, illegal squatters occupied a EUR 3.6 million property in Amsterdam, demonstrating how extreme the housing crisis had become.[8] An analysis by ING Bank in September 2024 pointed out that the cabinet’s current annual housing construction budget of EUR 1.5 billion is insufficient to deal with the crisis, and that EUR 3-5 billion would be needed annually to achieve the goal of building 100,000 new homes per year.[9]

Immigrants come to the Netherlands primarily for work, finding employment in industry, logistics and trade, meat processing, and agriculture. In 2024, only 12% of new arrivals were asylum seekers. The Dutch economy is growing, despite the European economic crisis and the political crisis in the Netherlands.[10] Beyond economic aspects, the social structures for receiving migrants are not adequately developed, as the Dutch housing supply is unable to keep pace with this quasi-open policy and the huge population growth. This became a key element in the election campaign of Geert Wilders, leader of the Freedom Party (PVV). At the same time, migrant workers, approximately 800,000 people, are themselves victims of the housing crisis and disproportionately high rents in key cities such as Rotterdam, The Hague, and Amsterdam.[11] This is well illustrated by the lives of thousands of seasonal workers employed in Westland but not provided with local accommodation by their employers, who are forced to seek housing in nearby The Hague, where they live in appalling conditions in overcrowded, dilapidated apartments.

This has resulted in a shortage of 400,000 homes in the Netherlands, and as Peter Boelhouwer, an expert at Delft University of Technology, noted, the Dutch housing crisis is already dramatic. Economic demand for labour is not matched by increased construction activity, foreshadowing an even more severe crisis in the future.[12] Such a scenario poses a major risk to integration prospects, given that the Netherlands has serious segregation issues.[13] Newly arrived migrants face astronomical rents, overcrowding, and unscrupulous landlords, and sometimes four, five, or six people live in one room in a very small, poorly maintained house.[14] These circumstances aggravate social tensions between the original population and immigrants, as migrants are unable to participate in social and cultural activities in their neighbourhoods, lead a regular life outside of work, or provide adequate education for their children. In such a situation, some young people join street gangs and participate in criminal activities, and Islamist groups active in the Netherlands also exert a strong pull.[15]

The housing crisis in the United Kingdom

The housing crisis in Great Britain has also reached critical levels, especially in cities with high migrant populations. According to a detailed analysis by Bloomberg in June 2024, the city of Leicester offers a dramatic example of this: the city’s population grew by 11.7% between 2010 and 2021, largely due to foreign immigrants. The local council announced that it would be effectively bankrupt within 18 months due to rising rents and a housing shortage, making it impossible to provide housing for everyone who is entitled to it.[16] According to Migration Watch UK’s February 2024 report, net migration adds around 700,000 people to the population each year, and, by 2036, Britain’s population could increase by 6.6 million, of which 6.1 million (more than 90%) would come from immigration. That’s equivalent to five cities the size of Birmingham. According to a study by the Centre for Policy Studies, Britain will need 5.7 million new homes over the next 15 years to accommodate the immigration-driven population growth.[17] The social consequences of the crisis are well illustrated by Crisis UK’s June 2025 report, which states that the number of people living on the streets in London rose to 3,028 between April 2024 and March 2025, representing a 27% increase from the previous year and a 90% increase from ten years ago.[18] The English Housing Survey published by the UK government in May 2025 highlighted that, due to significant increases in rent and mortgage payments, a higher proportion of mortgage holders and private tenants are struggling to pay their housing costs, with certain groups, such as low-income private tenants, spend more than 30% of their income on housing costs.[19]

In Great Britain, the financial situation and country of origin of immigrants can have a varying impact on housing costs. According to a British study from 2013, housing prices rise by 8% over two years for every 1,000 European immigrants, while the arrival of Asian immigrants raises prices by 6%. The London housing market in particular is under considerable pressure. Like other Europeans, British natives tend to move away when immigrants settle in their neighborhood.[20] In abandoned areas, house prices fall for a short time, but rents start to rise as soon as the area becomes saturated.

A publication by the Migration Observatory at Oxford University states that migration contributes to population growth and increases demand for housing, leading to higher housing costs. As in other countries, the housing supply in the United Kingdom grew more slowly than the housing demand. The study also notes that in 2018, the Migration Advisory Committee concluded that a 1% increase in the UK population, as a result of migration, led to a 1% increase in house prices. Their findings were generally consistent with other surveys conducted by the Office for Budget Responsibility and the UK government, and converge with research conducted on the continent. The Migration Observatory adds that newly arrived immigrants are more likely to live in homes rented from private individuals or private companies as they do not have access to social housing, thereby increasing demand in the market. Migration may therefore have a greater impact on pricing, as the private sector is even more determined by supply and demand than the public sector.[21]

Conclusion

The link between migration and the housing problem is simply a result of increased demand, as migration changes the demographics of a city or town. According to the law of supply and demand, demand from new arrivals tends to concentrate in certain areas with affordable housing, which in turn raises prices in more expensive areas through a spillover effect. Immigrants themselves increase their numbers through family reunification or the birth of children, which makes their initial place of residence too small, forcing them to move elsewhere. This puts pressure on new areas, forcing their original residents to move further away, which in turn drives up prices in these new areas. Young people cannot afford to rent or buy in decent neighborhoods, and an entire generation is unable to secure affordable housing. Another social cost of this housing problem is segregation, which highlights the deep social divisions in European societies. The political consequences should not be overlooked either, because the concentration of migration in certain regions virtually guarantees support for left-wing parties, as the latter make false promises about the development of immigrant neighborhoods.