Immigration and House Prices in Stockholm

Sammanfattning: In this paper we investigate the impact of changes in the share foreign born population on property values in Stockholm Municipality. We use 35,000 single- family home transactions between 2000 and 2017 to estimate the direct and indirect effect of changes in the share of foreign born population on house prices using demographic information from 130 neighbourhoods. We find significant evidence of decreasing house prices from the three-year lagged immigration with shift-share and geographic diffusion instrumental variables. No impact from immigration is found on the size of the native population or high income earners. When we estimate the indirect impact of different levels of immigration at the closest nearby rail transit station to homes within a neighbourhood, no significant effect is found but the ethnic composition along the entire subway line is close to significant. The results indicate a negative effect of immigration in line with recent research, but the number of observations and neighbourhood control variables should be extended to overcome significance and endogeneity concerns.