Housing market reactions in presence of retirees’ migration

Abstract

Retiree migration in Europe has been an increasing phenomenon during the last fifteen years as people from Northern countries move to the South. Spain has been one of the primary destinations for this group where they tend to concentrate in some coastal and very warm areas such as Alicante, Islands and the South. The larger groups are British and Germans retiree arriving to Alicante and their flow of arrivals are in the same period when price and construction start to growth dramatically. This paper explores the role these retiree migrants could have played in the expansion process of the housing market in Alicante. We specifically investigate their implications on the housing prices and the different impact related to the nationality. Using time series analysis, the paper uses time methods to adjusts a housing demand function where international economic variables are introduced in order to capture the impact of monetary and income conditions in Germany and UK on Alicante housing market. Results seem to suggest that the strong appearance of the retiree flow of migration could have created a shock in housing market in Alicante with different effects depending on the nationality.