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Political Risk Affects Real Estate Markets

Author

Listed:
  • Sam Monfared

    (Simon Fraser University)

  • Andrey Pavlov

    (Simon Fraser University)

Abstract

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.

Suggested Citation

  • Sam Monfared & Andrey Pavlov, 2019. "Political Risk Affects Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 58(1), pages 1-20, January.
    • Handle: RePEc:kap:jrefec:v:58:y:2019:i:1:d:10.1007_s11146-017-9619-y
    DOI: 10.1007/s11146-017-9619-y
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    Cited by:

    1. Shikong Luo & Alan Tidwell & Sherwood Clements, 2022. "Does Political Uncertainty Affect Residential Development?," The Journal of Real Estate Finance and Economics, Springer, vol. 65(4), pages 572-592, November.

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