The globalization of local housing markets: immigrants, the motherland and housing prices in Australia

The impact of immigrants on housing prices and rents has been well documented in the literature. There has been less research, however, on other mechanisms by which global economic and financial developments may impact on local housing markets. We investigate whether the foreign-born—that is the stock of previous immigrants—act as a conduit for economic changes abroad to influence local housing markets. Examining disaggregated regions in Australia from 2006-16, we construct a measure of the average performance of the motherland economies of the foreign-born for each region. We find evidence that house prices and rental growth tend to rise when motherland economies are performing poorly. This effect is economically meaningful, robust and appears to represent a distinct channel from the immigration effect.