FREIHARC · Foreign Real Estate Investment, Housing Affordability, and Regulations: A Comparative Political Economy Analysis of 50 Countries

The rapid influx of global capital into residential real estate has significantly reshaped housing markets, particularly in global cities, where foreign investment has driven up property prices and rents, exacerbating housing affordability challenges. Despite its economic benefits, Foreign Real Estate Investment (FREI) often makes homeownership less attainable for local residents, leading to varied government responses. While some case studies have explored this issue on a localized level, a large-scale, comparative analysis remains absent. This project addresses this gap by investigating the impact of FREI on housing affordability and homeownership across 50 countries, using a comparative political economy approach. The study will analyze divergent regulatory approaches and evaluate their effectiveness in managing FREI’s effects on housing markets. Using advanced econometric methods like Vector Autoregression (VAR) and Instrumental Variable (IV) models, and developing two original datasets—Foreign Real Estate Investment Index (FREI) and Foreign Real Estate Investment Regulation Index (FREIR)—this research will provide a comprehensive analysis of the complex interactions between foreign investment, housing market dynamics, and regulatory frameworks. The findings will offer critical insights for policymakers to develop strategies that balance the benefits of foreign investment with the need for affordable housing.