How immigration affects house prices: evidence from European countries

Abstract

Does immigration contribute to the continuous rise of house prices in Europe? My findings reveal a persistent positive correlation between house prices and immigration inflows from 2011 to 2021. I have used a model initially developed by Albert Saiz in 2007, which uses an instrumental variable approach to address endogeneity. I have concluded that an increase in immigration inflow equal to 1% of the total population leads to a 1.58% rise in house prices aligning with Saiz’s findings. My study aims to enhance the understanding of the relationship between immigration and housing prices, adding to the existing literature on this topic within Europe as a whole. It extends the scope of the investigation to an international context in contrast with most of the existing literature that examines this relationship on a national level.