Rapid Evidence Assessment of the Research ... - Rural Housing

To what extent (if any) have second homes increased house prices; and have they crowded out prospective first-time buyers?
3. To what extent (if any) have second
homes increased house prices; and
have they crowded out prospective
first-time buyers?
Introduction: the evidence requirements
72. This chapter considers the research evidence for the claims that second homes have increased house
prices and crowed out prospective first-time buyers. It examines evidence from published national and local
studies.
73. The impact of second home purchase on property prices, affordability and access is widely assumed, for
example:
“Second homes and holiday homes contribute to rural social exclusion as local residents are increasingly
priced out of the limited housing resource” (Direct Line, 2005, p11).
and
“Put simply, in an exclusively ‘local market’ first-time buyers have only to contend with competition from
other locals. But in an open ‘second home’ market the number of competitors is inflated, heightening
demand pressure, pushing up prices, and reducing both affordability and access for those with least
income” (Suffolk County Council, 2004, p30).
74. However, the evidence to support such assertions is wholly inadequate. There are two main requirements
in attempting to determine the market impact of second homes; firstly, to identify where they fit into the market;
and secondly, to isolate their impact on property prices and housing access. In relation to the first requirement,
the more second homes are drawn from housing stock at the ‘access’ end of the market, the greater their
direct impact on both first-time buyers and lower income households seeking to move on in the market. The
second requirement is the need to isolate the impact of second home purchase in relation to other relevant
factors in the supply and demand equation, including demographic and economic change; income levels, the
growth of home ownership; the impact of Right to Buy sales; interest rate levels; property price inflation; the
workings of the planning system and the limited availability of social housing.
75. Unfortunately, robust analysis of the profile of second homes and of their separate impact on property
prices and housing access is extremely limited, and the resultant dilemma is appropriately captured in the 2004
study undertaken by Suffolk County Council:
“As there is no house price data at a lower (parish) level it cannot be said, with any authority, whether
second homes have a direct influence on rising prices or not. It is a national trend that is dependent on a
range of factors” (Suffolk County Council, 2004, p30).
76. The studies available fall into two categories; national but more generalised; and local but highly specific;
and the two can offer contradictory findings.
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