Do Foreign Buyers Pay More Than Domestic Buyers? Evidence from International Transaction-Level Data

Daisuke Miyakawa (), Chihiro Shimizu and Iichiro Uesugi
Additional contact information
Daisuke Miyakawa: Hitotsubashi University Business School (HUB)
Chihiro Shimizu: Hitotsubashi University

The Journal of Real Estate Finance and Economics, 2024, vol. 68, issue 3, No 2, 394-424

Abstract: Abstract In this paper, we examine the role of international capital flows in real estate prices by quantifying the extent foreign buyers overpay for their realty investments as well as the spillover effect of such behavior on property prices domestic buyers pay. Using a unique dataset accounting for about 30,000 realty investment transactions in Australia, Canada, France, Hong Kong, Japan, the Netherlands, the United Kingdom, and the United States, we find the following. First, foreign investors pay significantly higher prices than domestic investors, even after taking a wide variety of controls into account. Second, this paying over the odds becomes smaller the larger the buyers’ exposure to realty investments in the host countries. These results indicate that foreign investors are overcharged when they are less informed about the property market and that the extent to which they are overcharged decreases the more investment experience they have. Third, we did not find any significant spillover effects from overpaying by foreign investors to real estate prices in host countries. This finding is consistent with a group of extant studies employing aggregate-level data to examine the link between international capital flows and real estate prices.

Keywords: Realty Prices; Transaction Data; Geographical Location; Spillover Effects (search for similar items in EconPapers)
JEL-codes: D83 F21 G12 R30 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11146-022-09937-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:68:y:2024:i:3:d:10.1007_s11146-022-09937-6

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-022-09937-6

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().