There is a new Airbnb in town – what happens to your apartment price? Examining the impact of Airbnb on housing transaction prices in Helsinki

Abstract

The purpose of this thesis is to investigate whether Airbnb has impacted apartment prices in the city of Helsinki between 2014 and 2021. Our goal is to find out the overall impact across all apartment types while also investigating whether the impact differs based on the room count and the apartment's location. Despite its relatively short age, similar studies have been published globally from larger cities in North America and Europe. However, smaller cities in the Nordics have yet to be investigated. Hence, our paper contributes to the growing literature on Airbnb's impact on the housing market by bringing forth new evidence from Finland.

We utilize a broad dataset collected from two different sources. We have obtained data on apartment prices in Helsinki from the database of the Federation of Real Estate Agency in Finland (Kiinteistövälitysalan Keskusliitto; KVKL), while the data on Airbnb activity in Helsinki was received through AirDNA. Our empirical part in this paper is divided into two phases. Firstly, we use an OLS model to analyze the impact of apartment characteristics on the price from which we obtain and group the residuals by postal code area and year. Secondly, we employ a fixed effect model with both time and neighborhood fixed effects and a set of socioeconomic time-varying characteristics and the number of active Airbnb apartments to find out the impact of the short-term rental platform on apartment prices in the city.

We find statistically significant evidence implying that, on average, an increase of 100 Airbnb apartments in a zip code area increases the apartment prices by 1.4 %. Furthermore, the effect is statistically significant for apartments with one or two rooms and is stronger in areas with a large number of apartments used for Airbnb, namely areas closer to the city center.