The Impact of Airbnb on Residential Property Values and Rents: Evidence from Portugal

FEUNL Working Paper Series No. 630, 2019

32 Pages Posted: 3 Jun 2019

See all articles by Sofia F. Franco

Sofia F. Franco

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); Nova School of Business and Economics

Carlos Daniel Santos

New University of Lisbon - Nova School of Business and Economics

Rafael Longo

Date Written: May 1, 2019

Abstract

Short-term rentals have facilitated the upraise trend in tourism growth in several cities around the world. However, concerns for the negative effects that such home-sharing platforms may have on the housing market and traditional markets have driven community groups and housing advocates to intensely react against them. Whether or not short-term rentals increase housing prices and rents for local residents is an empirical question. We quantify the causal effects of Airbnb's short-term rentals on urban housing affordability in Portugal by estimating quarterly housing rents and prices as a function of Airbnb concentration. We take advantage of the 2014 regulatory reform and employ a difference-in-differences (DiD) empirical strategy. We estimate an overall increase in property values of 34% and 10.9% for rents due to the short-term lease regulatory reform. We also find that these effects are particularly localized to the historical centers and areas attractive to tourists in the cities of Lisbon and Porto. A better understanding of the effects of short-term home rentals on housing markets and of the magnitude of its impact on residential property prices and rents are crucial information to determine whether it needs to be regulated and how proper regulation should be designed.

Keywords: Property Values, Airbnb, Short-term Rentals, Regulation

JEL Classification: R21, R31, Z32

Suggested Citation

Franco, Sofia F. and Santos, Carlos Daniel and Longo, Rafael, The Impact of Airbnb on Residential Property Values and Rents: Evidence from Portugal (May 1, 2019). FEUNL Working Paper Series No. 630, 2019. Available at SSRN: https://ssrn.com/abstract=3387341 or http://dx.doi.org/10.2139/ssrn.3387341

Sofia F. Franco (Contact Author)

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE) ( email )

Rua Miguel Lupi, 20
Lisbon, 1200-781
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

HOME PAGE: http://www.iseg.utl.pt/~uece/

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

Carlos Daniel Santos

New University of Lisbon - Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

No contact information is available for Rafael Longo

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