Do short-term rental platforms affect housing markets? Evidence from Airbnb in London

Abstract

Recognizing housing markets as interconnected regional networks with potential spatial spillovers, this study explores Airbnb's influence on housing prices across different regions over time. Using property-level data in London, the study constructs a spatial panel dataset to assess Airbnb's direct and spatial spillover (indirect) effects on housing prices. The introduction of the 90-Day Airbnb Rule in January 2017 in London makes it an ideal case for examining the effectiveness of regulatory responses. This research thus evaluates such regulation's impact by comparing the housing market conditions before and after its implementation, providing insights into how such regulatory measures can mitigate the negative externalities associated with short-term rental platforms. This study aims to deepen the understanding of Airbnb's role in housing market dynamics and the effectiveness of local government regulations.