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Political Risk Affects Real Estate Markets

Sam Monfared () and Andrey Pavlov ()
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Sam Monfared: Simon Fraser University
Andrey Pavlov: Simon Fraser University

The Journal of Real Estate Finance and Economics, 2019, vol. 58, issue 1, 1-20

Abstract: Abstract Using data from the recent referendum in Britain to leave the E.U., we document a link between political uncertainty and real estate values. Specifically, we find that real estate values in areas of London that have a high concentration of E.U. passport holders declined significantly more than the rest of the city following the Brexit vote. In addition, we find that areas with concentration of highly-educated residents also experienced a disproportionately large price decline. These findings suggest that real estate markets are forward looking, incorporate information quickly, and are segmented.

Keywords: Political risk; Real estate markets; Brexit (search for similar items in EconPapers)
Date: 2019
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The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

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Handle: RePEc:kap:jrefec:v:58:y:2019:i:1:d:10.1007_s11146-017-9619-y