AirBnB and the Housing Market

Abstract: Peer-to-peer short-term rental (STR) platforms have been a thorn in cities’ side for years. Many started regulating the platforms to prevent properties from being diverted to short-term use in tight residential housing markets and to counteract hikes in housing prices. We empirically assess the effects of STR regulation in leading German cities. The analysis draws on rich data from the largest STR platform, Airbnb, and on data for rental and housing sales offers in Germany. We find that the studied regulations diminish short-term rental activity, but that reductions in STR listings and reservations are moderate in size. Importantly, responses of professional Airbnb hosts (who strip properties from long-term residential housing markets) tend to be small. Inadequate enforcement is shown to contribute to this pattern: Non-compliance turns out to be a prevalent phenomenon in our data. None of the studied reforms exerted a significant effect on rental and property prices, even when focusing on within-city-areas with the highest Airbnb penetration rates.

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