Abstract
The impact of immigrants on housing prices and rents has been well documented in the literature. There has been less research, however, on other mechanisms by which global economic and financial developments may impact on local housing markets. We investigate whether the foreign-born—that is the stock of previous immigrants—act as a conduit for economic changes abroad to influence local housing markets. Examining disaggregated regions in Australia from 2006-16, we construct a measure of the average performance of the motherland economies of the foreign-born for each region. We find evidence that house prices and rental growth tend to rise when motherland economies are performing poorly. This effect is economically meaningful, robust and appears to represent a distinct channel from the immigration effect.
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Notes
The urban areas that are included, in alphabetical order, are as follows; Adelaide, Brisbane, Cairns, Canberra, the New South Wales Central Coast, Darwin, Geelong, Gold Coast, Hobart, Melbourne, Newcastle, Perth, the Sunshine Coast, Sydney, Toowoomba, Townsville and Wollongong.
The median price estimates are calculated over a rolling 12-month period. In our models, we are looking at the census-to-census change in home prices from 2006 to 2011 and 2011 to 2016. As the censuses were undertaken in August we use the median home price data for February in the following year. This means that August is the middle month in the 12-month median calculation.
In the Electronic Supplementary Material we provide a full list of the countries for which each of the three EAM variables—RGDP, RHPI and RSPI—is available.
This is calculated as follows: \(100 \times \exp (-0.033 \times (0.3) ) - 1 = 1.0\).
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Moallemi, M., Melser, D., Chen, X. et al. The Globalization of Local Housing Markets: Immigrants, the Motherland and Housing Prices in Australia. J Real Estate Finan Econ 65, 103–126 (2022). https://doi.org/10.1007/s11146-021-09828-2
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DOI: https://doi.org/10.1007/s11146-021-09828-2