Immigration inflow cause native outflow

Abstract: We examine if the relatively large inflow of immigration during the last two decades has affected the Swedish housing market. With the social stigma of expressing anti- immigration sentiments, natives likely vote with their feet to express their preference for homogeneous neighbourhoods. If immigration inflows cause native outflows, the wage gap between them should lower the local aggregate demand for housing. Thus, the income and origin of immigrants play a role in explaining housing segregation as economic and cultural proximity should dampen the movement of natives. To determine the relationship between immigration and housing segregation empirically, we estimate two hedonic price models. Their purpose is to assess whether Swedes value homogeneous neighbourhoods more than declared by their political position. By using a novel dataset on micro house prices assembled through data scraping, we estimate the impact of immigration on both city and region level for Stockholm, Gothenburg and Malmo ̈. Our results are generalisable and suggest that there exist native flight in Sweden, causing decreased house prices. We find that natives are responsive to both short- and long-run trends in immigration. The results further indicate that cultural proximity matters in the decision of self-segregation and that it exhibits a tipping-point behaviour. It means that it is not until the foreign-born population exceeds a certain threshold that natives choose to self-segregate. Together, these results stress the relevance of successful integration and assimilation strategies to avoid the harmful consequences of a divided society.