The European Refugee Crisis and House Prices: Evidence from the United Kingdom

We study the effect of asylum seeker dispersal on house prices in England and Wales between 2004 and 2015. Using data from the UK Land Registry, we find that dispersal has a negative effect on house prices, and that this negative effect is stronger for smaller and less expensive dwellings. Moreover, this negative effect extends across district boundaries but diminishes with distance. Literature generally attributes this negative effect to an outward mobility response of natives, which results in reduced housing demand and prices. We find no evidence of such an effect. Instead, we show that dispersal leads to a sharp decrease in the sales of new property, while not affecting the sales of established property. In other words, households do not change their selling plans as a result of asylum seeker inflows, but properties that are sold sell at a lower price, which in turn discourages the construction of new property. Since dispersal is nonrandom, but driven by the costs of housing, our analysis relies on instruments that exploit the variation of dispersal but are plausibly exogenous to the evolution of housing prices.