Refugees and apartment prices: A case study to investigate the attitudes of home buyers

• Published in: Regional science and urban economics 2019-07, Vol.77, p.20-37
• Main Authors: van Vuuren, Aico, Kjellander, Josef, Nilsson, Viktor
• Format: Article
• Language: English
• Subjects: Announcements; Apartment buildings; Apartments; Attitudes; Business & Economics; Buyers; diversity; economic-impact; Economics and Business; Ekonomi och näringsliv; Environmental Sciences & Ecology; historic amenities; Home buyers; Homeowners; House prices; Housing; Housing prices; immigration; Neighborhoods; preferences; Prices; Refugees; Residential areas; Temporary housing; Urban Studies; Walking
• ISSN: 0166-0462; 1879-2308
• DOI: 10.1016/j.regsciurbeco.2019.02.003

We evaluate the price development of apartments in neighborhoods surrounding temporary housing for refugees in the year after an unpredicted announcement of building sites, targeting refugees, in Gothenburg. Information on such a development can indicate how much home buyers dislike the idea of having refugees in their neighborhood. We use a difference-in-difference approach that takes into account the walking distance to the building sites and the time since the announcement. We find support for a negative and significant price effect of around 4 percent for apartments that were within a 5-minutes walking distance from the building sites, while there is no impact for houses situated at a longer distance. We find that the impact essentially comes from a drop in apartment prices at the moment that the building permits were accepted. We find that the price effect increases with the neighborhood's education level. •This paper investigates the impact of an announcement to build refugee housing on the apartment prices in the vicinity of these building sites.•We investigate which areas (and which type of properties) react most to the announcements.•We collect data on property sales within Gothenburg between 2014 and 2017 and generate a walking distance variable..•.Appartments within a 10 minute walking distance were sold at a price that was around 4 percent lower than apartments situated at a longer distance.•The impact decreases rapidly with distance; an apartment that is situated farther than a 5-min walking distance does not experience any price change.•The impact increased during the year after the announcement, especially after the approval of the building permits.•High education neighborhoods face substantially larger negative impacts of the announcement than low education neighborhoods.