THE IMPACT OF UNIVERSITIES ON HOUSING PRICES IN LONDON

Abstract

London is the capital of UK and boasts as one of the largest financial city centres in the world. However, London’s cost of living is very high and it has the highest housing prices amongst all other UK cities. London is also considered to be one of the most popular university towns in the UK. This paper aims to study the relationship between the presence of universities and housing prices in London. Policymakers would benefit from understanding the impact universities may have on housing prices as they would be better equipped to tackle specific variables that may cause housing prices to rise rapidly. The regression models run have shown that the relationship between the presence of universities and housing prices is statistically significant and therefore the presence of higher education institutions does affect housing prices. When exploring the underlying economic channel, it was observed that this effect can be entirely explained by the effect of universities on the average age of a population and the overall level of education in the neighbourhood.