Home Away from Home? Foreign Demand and London House Prices

Ramadorai, Tarun and Badarinza, Cristian (2016) Home Away from Home? Foreign Demand and London House Prices. Working Paper.

Abstract

The infrequent nature of crises means that pure time-series methods struggle to distinguish the effects of capital flight on asset prices from a wide range of alternative drivers. We present a new cross-sectional approach, which is motivated by the insight that investors may have different "preferred habitats" within a broad asset class. We apply the method to the question of whether foreign capital is responsible for residential real estate price movements in global cities such as London and New York, especially during crises. Applying our method on large databases of housing transactions over the past two decades, we find that foreign risk strongly affects London house prices. The effects are long-lasting, and are associated with both safe-haven effects and immigration.

Item Type: Other Working Paper
Keywords: safe-haven, house prices, London, hedonic pricing, political risk, economic risk, finance
Subject(s): Finance
Date Deposited: 20 Jan 2014 10:28
Last Modified: 29 Nov 2018 12:16
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4948

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