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ABSTRACT We provide causal estimates of the effect of immigration on house prices and construction activity in Spain over the period 2000–2010. During this period Spain experienced spectacular swings in both immigration and the housing market. Our instrumental-variables estimates suggest that between 2000 and 2010, immigration led to an average 1.5 percent annual increase in the working-age population. This was responsible for an annual increase in housing prices of about 2 percent, and for a 1.2–1.5 percent increase in housing units. Overall, immigration was responsible for one quarter of the increase in prices and about half of the construction activity over the decade.