The effect of foreign investors on local housing markets: evidence from the UK

Filipa Sá

Journal of Economic Geography, 2025, vol. 25, issue 3, 329-349

Abstract: I use administrative data on properties owned by overseas companies to study the effect of foreign investment on house prices, affordability, construction, and vacant properties in England and Wales. To address endogeneity, I construct an instrument for foreign investment based on political conditions abroad. I find that foreign investment increases house prices. This effect is stronger for more expensive homes but is present at all points of the distribution. Foreign investment reduces affordability and the number of vacant dwellings but has no effect on construction. There is no evidence of heterogenous effects across areas with different housing supply elasticities, since construction is unresponsive even in high-elasticity areas.

Keywords: capital flows; foreign investors; house prices (search for similar items in EconPapers)
JEL-codes: F21 R21 (search for similar items in EconPapers)
Date: 2025
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