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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Authors

Petersen, Julia

Date

2023

Department

Taloustieteen laitos

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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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https://urn.fi/URN:NBN:fi:aalto-202401281927

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[kand] Kauppakorkeakoulu / BIZ