Political Risk Affects Real Estate Markets

  • Sam MonfaredEmail author
  • Andrey PavlovEmail author


Using data from the recent referendum in Britain to leave the E.U., we document a link between political uncertainty and real estate values. Specifically, we find that real estate values in areas of London that have a high concentration of E.U. passport holders declined significantly more than the rest of the city following the Brexit vote. In addition, we find that areas with concentration of highly-educated residents also experienced a disproportionately large price decline. These findings suggest that real estate markets are forward looking, incorporate information quickly, and are segmented.


Political risk Real estate markets Brexit 


  1. Akbari, A. H., & Aydede, Y. (2012). Effects of immigration on house prices in Canada. Applied Economics, 44(13), 1645–1658.CrossRefGoogle Scholar
  2. Autor, D. (2003). Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing. Journal of Labor Economics, 21(1), 1–42.CrossRefGoogle Scholar
  3. Badarinza, C. and T. Ramadorai. (2017). Home Away from Home? Foreign Demand and London House Prices. Journal of Financial Economics, forthcoming.Google Scholar
  4. Bourassa, S., & Hendershott, P. (1995). Australian Capital City Real House Prices, 1979-1993. Australian Economic Review, 28(3), 16–26.CrossRefGoogle Scholar
  5. Burnley, I. and Murphy, P. A (1994). Immigration, Housing costs and Population Dynamics in Sydney. AGPS, Canberra.Google Scholar
  6. Cvijanovic, D. and C. Spaenjers. (2015). Real Estate as a Luxury Good: Non-Resident Demand and Property Prices in Paris. HEC Working Paper.Google Scholar
  7. Gonzalez, L., & Ortega, F. (2013). Immigration and Housing Booms: Evidence From Spain. Journal of Regional Science, 53(1), 3759.CrossRefGoogle Scholar
  8. Gyimah, S. O., Walters, D., & Phythian, K. L. (2005). Ethnicity, Immigration and Hous- ing Wealth in Toronto. Canadian Journal of Urban Research, 14(2), 338–364.Google Scholar
  9. Financial Times (2016, December 2), retrieved from:
  10. Ley, D. and Tutchener, J. (2001) Immigration, Globalization and House Price in Canada's Gateway Cities, Housing Studies, 16, 199–223.Google Scholar
  11. Liao, W. C., Zhao, D. X., Lim, L. P., & Wong, G. K. M. (2015). Foreign Liquidity to Real Estate Market: Ripple Effect and House Price Dynamics. Urban Studies, 52(1), 138–158.CrossRefGoogle Scholar
  12. Moos, M., & Skaburskis, A. (2010). The globalization of urban housing markets: Immi- gration and the changing housing demand in Vancouver. Urban Geography, 31, 724–749.CrossRefGoogle Scholar
  13. Office of National Statistics (2016, November 10), retrieved from:
  14. Pavlov and Somerville (2017). Immigration and Real Estate Returns. Working Paper.Google Scholar
  15. Saiz, A., & Wachter, S. (2011). Immigration and the neighborhood. American Eco- nomic Journal: Economic Policy, 3(2), 169–188.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Beedie School of BusinessSimon Fraser UniversityVancouverCanada

Personalised recommendations