The Effect of Foreign Investors on Local Housing Markets: Evidence from the UK

46 Pages Posted: 29 Nov 2016

See all articles by Filipa Sa

Filipa Sa

King's College London; IZA Institute of Labor Economics

Date Written: November 2016

Abstract

I use newly-released administrative data on properties owned by overseas companies to study the effect of foreign investment on the housing market in England and Wales. To estimate the causal effect, I construct an instrument for foreign investment based on economic shocks abroad. Foreign investment is found to have a positive effect on house price growth. This effect is present at different percentiles of the distribution of house prices and is stronger in local authorities where housing supply is less elastic. Foreign investment is also found to reduce the rate of home ownership. There is no evidence of an effect on the housing stock or the share of vacant homes.

Keywords: foreign investors, House Prices

JEL Classification: F21, R21

Suggested Citation

Sa, Filipa G., The Effect of Foreign Investors on Local Housing Markets: Evidence from the UK (November 2016). CEPR Discussion Paper No. DP11658. Available at SSRN: https://ssrn.com/abstract=2877263

Filipa G. Sa (Contact Author)

King's College London ( email )

150 Stamford Street
London, SE1 9NN
United Kingdom

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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