Airbnb’s effect on the housing market in terms of prices and welfare

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School of Business | Bachelor's thesis
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Date
2023
Major/Subject
Mcode
Degree programme
Bachelor’s programme in Economics
Language
en
Pages
25+6
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Abstract
This literature review aims to explore the effects of short-term rentals (STRs) on the European housing market, with a focus on Airbnb. It takes a look at gentrification in the context of tourism, predicting the spatial relocation of households due to financial limitations and changes in amenities. Two relevant theoretical frameworks, namely laws of demand and supply and the hedonic pricing model, suggest a price increase in rentals and prices due to a shortage in the long-term rental market and monetary incentives for homeownership. Examining and comparing empirical evidence from a growing body of literature from Europe shows price growth; however, it differs in effect size. Documentation of STR regulation shows that Airbnb listings reduce in quantity, and rents and prices in targeted neighborhoods fall. Differences in results might be subject to the methods used, the city-specific density of Airbnb, and the share of commercial activity, as well as cultural, geographical, and constitutional differences.
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Thesis advisor
Stryjan, Miri
Keywords
Airbnb, Housing markets, Short-term rentals, P2P platforms, Amenities, Tourism
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