Purpose The study aims to examine the behavior of house prices in developed economies and in emerging markets in response to migration flows by market type – gateway cities and national markets, as well as by origin of migrants. Design/methodology/approach The author partitions migrant proxies, including flows and stocks, by type of country origin. Identification strategy is based on isolating the exogenous variation in house prices by applying traditional “shift share” instruments. Impact on both residential price levels and first order differences is reported for capital cities and national markets. Instrumental variables (2SLS) confirm results of OLS models, whereas spatial econometric models suggest correction in models with levels. Findings Migration impact on housing prices differs by level of development. In advanced economies, migration effects are positive; positive impact of migration on housing valuation measured in levels is documented once structural error model (SEM) adjustment is performed. In emerging markets, inflows of migrants from emerging markets negatively impact housing valuations both in the short-term and in the long run. Results for both subsamples are stronger in regressions which measure real estate prices in USD rather than in inflation-adjusted terms. Changes in wages and economic growth point at income channel as possible transmission mechanism in the short term. In advanced economies, wage levels are unaffected my migration stocks, whereas housing valuations are boosted up in SEM models. This at least partially explains growing discontent of local populations against the backdrop of growing housing stock unavailability in developed countries. Research limitations/implications Limitations of this study are twofold. First, estimates of annual flows are obtained from changes in stock over four-five-year periods. This could be one explanation why regression results with flows are less significant; changes in levels can only be viewed as crude migration proxies. Second, my data aggregated at national level. Therefore, I am unable to measure displacement effect (Sá, 2015). Originality/value The study considers both stocks of migrants and their flows and attempts to differentiate between immediate impact and long-term effects. In this setup, stocks and flows proxy for long-term and short-term response. It also contrasts influence exercised by migrants from developed economies and emerging on housing valuations, labor markets and economic growth.
Igor Semenenko (Wed,) studied this question.