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

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  • Sá, Filipa

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.

Suggested Citation

  • Sá, Filipa, 2016. "The Effect of Foreign Investors on Local Housing Markets: Evidence from the UK," CEPR Discussion Papers 11658, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11658
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    References listed on IDEAS

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    Cited by:

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    3. Badarinza, Cristian & Ramadorai, Tarun, 2018. "Home away from home? Foreign demand and London house prices," Journal of Financial Economics, Elsevier, vol. 130(3), pages 532-555.
    4. Fischer, Andreas & Zachmann, Lucca, 2020. "The effect of self-financed property buyers on local house prices," CEPR Discussion Papers 14632, C.E.P.R. Discussion Papers.
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    6. Zhimin Li & Leslie Sheng Shen & Calvin Zhang, 2020. "Capital Flows, Asset Prices, and the Real Economy: A "China Shock" in the U.S. Real Estate Market," International Finance Discussion Papers 1286, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    Foreign investors; House prices;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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