Decomposing the Impact of Immigration on House Prices

Rosa Sanchis-Guarner

No 2022/10, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Immigrant inflows affect local house prices by increasing housing demand when housing supply is fixed. In this paper, I show that we can formally decompose total demand changes into changes stemming from an immediate increase in population due to new arrivals (“partial effect”) and additional changes in demand from relocated natives (“induced effect”). I propose a methodology to separately estimate these two effects using Spanish provinces’ data from 2001- 2012. Applying an instrumental variables approach, I find that a 1 p.p. increase in the immigration rate increases average house prices by 3.3% and rents by 1%. Partial demand estimates are 24% smaller than the total estimates, due to immigrants and natives locating in the same provinces. The results show that accounting for the impact of immigration on native location choices is key to understanding net demand adjustments, as partial and total effects can significantly differ depending on native population mobility.

Keywords: Immigration; House Prices; Spain (search for similar items in EconPapers)
JEL-codes: J61 R12 R21 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2022
New Economics Papers: this item is included in nep-geo, nep-int and nep-ure
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https://ieb.ub.edu/en/publication/2022-10-decompos ... ion-on-house-prices/

Related works:
Journal Article: Decomposing the impact of immigration on house prices (2023)
Working Paper: Decomposing the Impact of Immigration on House Prices (2017)
Working Paper: Decomposing the Impact of Immigration on House Prices (2017)
Working Paper: Decomposing the impact of immigration on house prices (2017)
Working Paper: Decomposing the impact of immigration on house prices (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2022-10

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