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

Rapid Evidence Assessment of the Research Literature on the Purchase and Use of Second Homes
Economic impacts
189. The literature reviews on the economic impact of second home ownership have primarily focussed on the
housing market. Particular attention during the 1970s to 1990s was given to housing competition (see above),
house price inflation, initial acquisition, property speculation and general stock improvements. Broader impacts
on the rural economy have been relatively poorly explored over the last thirty years.
190. The issue of housing competition was summarised by Shucksmith (1981). He argued that the essence of
the problem was that in rural areas, local people in work were on relatively low incomes compared to affluent
outsiders able and willing to purchase properties. Furthermore, there was a low level of new housebuilding
(especially affordable housing) because, partly, of the rigid application of planning policies to protect and
conserve the environment. This perspective has been emphasised in many studies over the last few decades
culminating in the report of the Affordable Rural Housing Commission (2006). More sophisticated and detailed
analysis and discussion (for example, Cloke & Thrift, 1987) emphasised the complexity of the ‘competition’.
There is, thus, a need to move away from gross oversimplifications that focus on existing residents versus
newcomers. Instead, there is a requirement to better understand local housing markets and housing classes.
For example, local owner-occupiers with an equity base may disadvantage low income existing households as
much as in-migrants. Furthermore, from a second homes perspective, it is difficult to disentangle its effect on
competition from that by holiday home owners and commuters. There is also often an assertion that second
home owners compete for the same types of property as low income households that have aspirations to
purchase. Studies in the 1970s to 1990s indicated that this was not universally the case.
191. A linked issue is whether and the extent to which the growth of second home ownership leads to house
price inflation. During debates in the 1970s, there were a number of schools of thought based on different
research methods:
• Local case study approach: At a local settlement level, competition for houses can be exacerbated by
second home ownership leading to a bidding up of prices (for example, Jacobs, 1972).
• Statistical analysis of house price increases and numbers of second homes: A number of studies using pre
and post-1974 local government boundaries attempted to show a correlation between these two variables.
These often led to conclusions that there was an association between rising house prices and the growth
of second homes (for example, Clark, 1982).
• Local housing market studies: These focussed on issues such as housing competition between classes
(see above), the nature of the rural economy, wage levels and socio-demographic changes. Conclusions
tended to highlight that house price inflation was the outcome of the interplay between many factors and
that it could be misleading to over-emphasise the impact of the growth of second home ownership (for
example, Downing & Dower, 1973).
192. The most recent definitive study that attempted to bring together these types of approaches was work
undertaken for the Welsh Assembly Government in the early part of this decade reported in Tewdwr Jones et al
(2002) and a national survey published by the Countryside Agency (2002a). Both reports concluded that it was
difficult to substantiate the effect of second homes on house prices without taking account of local economies
and housing markets. They both, however, noted that external pressures (including demand for second homes)
had a significant impact on specific localities.
193. During the 1970s, there were a number of studies that investigated whether second home growth
increased investment in the local housing market through, for example, increased work for real estate
professionals, re-investment by vendors in the local area and the growth of house improvement work. Gallent
et al (2005, pp51-52) in their review of this aspect of the impact of second home ownership concluded that it
was ‘difficult to judge and quantify the effects’. Again, the authors emphasised that it often depended on local
circumstances such as the type of property purchased and the socio-demographic characteristics of sellers.
Nevertheless, this is a potentially interesting aspect as it suggests a positive economic impact of second homes.
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