Shifting to Portugal: a narrative about Lisbon’s short-term rental platforms and the housing market

In response to The Guardian, in June 2019, the mayors of ten European cities requested the European Union to assist them address the unfavorable impression of Airbnb and different trip rental websites on their cities. These platforms, they argued, had been assessing residents outdoors town. The mayors had been reacting to a ruling by the Advocate Common of the European Court docket of Justice, who issued a non-binding opinion expressing that Airbnb needs to be considered as a digital info supplier fairly than a standard actual property agent. They understood that this transfer might stop them from regulating the presence of Airbnb of their cities. Nonetheless, a number of cities world wide have carried out measures to curb the expansion of short-term trip platforms, together with Amsterdam, Barcelona, ​​Berlin, Los Angeles and New York.

The mayor of Lisbon was not among the many subscribers to this letter, presumably as a result of as of June 2019, Lisbon was already in its seventh month of imposing restrictions on short-term trip leases. Certainly, in November 2018, the municipality of Lisbon had banned new property registers for the short-term rental market in sure historic districts of town heart. The registration of the lodging is a compulsory step to promote the property on short-term seasonal rental platforms. Renting unregistered lodging is punishable by a superb.

The capital of Portugal is a very fascinating case research as a result of it has seen a really fast enhance in property costs within the current previous, and it has additionally hosted a tourism growth. Between the primary quarter of 2016 and the final quarter of 2019, the median value of actual property per sq. meter within the metropolis of Lisbon elevated by greater than 70%. The World Journey Awards elected Lisbon as the highest metropolis break vacation spot on this planet in 2017, 2018, 2019 and 2020. The variety of in a single day stays in Lisbon reached over 11 million in 2019, roughly 20 instances its resident inhabitants.

Extra just lately, the mayor of Lisbon wrote an open letter within the The impartial reassess post-pandemic priorities: “Vital staff and their households have been more and more pressured to go away the nation as Airbnb-style trip leases have taken over greater than a 3rd of properties in downtown Lisbon, driving up rental costs, deepening communities and threatening its uniqueness. ” Nonetheless, the mayor has not at all times been in favor of curbing the expansion of those platforms. In 2016, at a time when Airbnb’s choices within the Lisbon metropolitan space had nearly tripled since January 2014, he stated. Bloomberg: “That is the primary time that tourism has enabled many individuals to take part within the metropolis’s improvement course of. We should not be afraid of this new dynamic; we shouldn’t be afraid of progress. Quite the opposite, we should put together town to welcome much more vacationers. “

In a single current working doc, my co-authors and I are benefiting from the ban put in place by the municipality of Lisbon in November 2018 in sure neighborhoods, which affords an excellent configuration for estimating the causal impression of short-term rental rules on the rental market. housing. We depend on the truth that the ban was prolonged a yr later to some adjoining areas to quantify the impression of this ban on registries, Airbnb costs and the Lisbon metropolis actual property market. We use two administrative datasets on short-term rental data and actual property costs and transactions, and knowledge collected from the web on Airbnb’s rental listings and costs.

We doc a peak of latest registers within the areas initially handled of 30.9%, between the announcement and the implementation of the ban, pushed by the nationwide holders in place, following the approval of the legislation . This reveals that the anticipation of the coverage because of its large public debate has allowed incumbent house owners to enter the market within the very previous few weeks when allowed. Airbnb’s portions and costs do not seem like responding to the ban within the close to time period. Concerning the actual property market, we discover proof of a drop in demand for homes within the handled areas, specifically two-bedroom flats, resulting in a 20% contraction in transactions. vis-a-vis comparability areas. Costs have fallen by 8%, displaying that the choice of renting housing within the short-term rental market is a vital determinant of demand, at the very least in vacationer areas.

The next coverage implications apply. First, you will need to be cautious about lengthy durations of anticipation of discussions of zoning bylaws that create occupancy rents. Second, we offer causal proof {that a} short-term rental ban is slowing the housing market. This impact is concentrated in sure sorts of properties, particularly two-bedroom flats. Nonetheless, our estimates counsel that sharing economic system platforms, regardless of their significance, usually are not the complete story behind the dramatic growth within the housing market within the metropolis of Lisbon.

João Pereira dos Santos is a doctoral pupil in economics on the Nova College of Enterprise and Economics in Lisbon. He was a visiting pupil at Harvard College within the spring of 2019 with a Fulbright scholarship. João participated within the superior research program of the Kiel Institute for the World Economic system. He has revealed in main media such because the Journal of Financial Geography, Economica and the European Economics Overview. Twitter: @JPSantos_econ

This weblog publish is predicated on Do short-term leases enhance home costs? Quasi-experimental proof of Lisbon, by Susana Peralta, João Pereira dos Santos and Duarte Gonçalves, offered on the 2021 Royal Financial Society Annual Convention.

This merchandise was first revealed within the World Financial Discussion board

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