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Immigration and House Prices in Sweden

Müller, Lena Sophia LU (2018) NEKP01 20181
Department of Economics
Abstract
Over the last two decades Sweden became one of the European countries with the highest levels of immigration. About the same time the country experienced a substantial boom in house prices. Since many analysts view a housing shortage as the main driver for the increase in prices it seems natural to ask if immigration has the potential to accelerate prices in the housing market. This paper analyses the nexus between immigration and house prices for the period between the years 2000 and 2016. Based on a newly compiled panel data set, I analyse 286 Swedish municipalities by the means of a fixed effects regression model. To account for possible endogeneity, I present a strategy to apply the widely used shift-share methodology. The results show... (More)
Over the last two decades Sweden became one of the European countries with the highest levels of immigration. About the same time the country experienced a substantial boom in house prices. Since many analysts view a housing shortage as the main driver for the increase in prices it seems natural to ask if immigration has the potential to accelerate prices in the housing market. This paper analyses the nexus between immigration and house prices for the period between the years 2000 and 2016. Based on a newly compiled panel data set, I analyse 286 Swedish municipalities by the means of a fixed effects regression model. To account for possible endogeneity, I present a strategy to apply the widely used shift-share methodology. The results show that a 1% increase in population from immigration is associated with a rise in purchase prices for housing between 0.7 and 1.8 % in Swedish municipalities. These results are supported by an extensive number of robustness checks. The findings from this study have relevant implications for Swedish policy makers, especially when considering that immigration levels are expected to stay on a high level in the foreseeable future. (Less)
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author
Müller, Lena Sophia LU
supervisor
organization
course
NEKP01 20181
year
type
H2 - Master's Degree (Two Years)
subject
keywords
housing market, immigration, house prices, Sweden
language
English
id
8958267
date added to LUP
2018-09-26 09:16:30
date last changed
2018-09-26 09:16:30
@misc{8958267,
  abstract     = {Over the last two decades Sweden became one of the European countries with the highest levels of immigration. About the same time the country experienced a substantial boom in house prices. Since many analysts view a housing shortage as the main driver for the increase in prices it seems natural to ask if immigration has the potential to accelerate prices in the housing market. This paper analyses the nexus between immigration and house prices for the period between the years 2000 and 2016. Based on a newly compiled panel data set, I analyse 286 Swedish municipalities by the means of a fixed effects regression model. To account for possible endogeneity, I present a strategy to apply the widely used shift-share methodology. The results show that a 1% increase in population from immigration is associated with a rise in purchase prices for housing between 0.7 and 1.8 % in Swedish municipalities. These results are supported by an extensive number of robustness checks. The findings from this study have relevant implications for Swedish policy makers, especially when considering that immigration levels are expected to stay on a high level in the foreseeable future.},
  author       = {Müller, Lena Sophia},
  keyword      = {housing market,immigration,house prices,Sweden},
  language     = {eng},
  note         = {Student Paper},
  title        = {Immigration and House Prices in Sweden},
  year         = {2018},
}