Short-Term Rental Bans and Housing Prices: Quasi-Experimental Evidence from Lisbon

The resource titled "Short-Term Rental Bans and Housing Prices: Quasi-Experimental Evidence from Lisbon" is a discussion paper published by the IZA Institute of Labor Economics. The authors of the paper are Duarte Gonçalves, Susana Peralta, and João Pereira dos Santos. This paper explores the impact of a zoning reform that banned new short-term rental registrations in certain areas of Lisbon, aiming to provide insights into the effects of such regulations on housing prices.

In response to the rapid growth of short-term rental platforms like Airbnb, several cities, including Lisbon, have implemented regulatory measures to manage their expansion. The study focuses on a specific ban introduced in November 2018, which aimed to control the number of short-term rentals in neighborhoods deemed to be oversaturated. The paper utilizes two administrative datasets alongside Airbnb data to analyze the consequences of this policy on housing prices and availability.

The findings indicate that the ban resulted in an average decrease of 8% in real estate prices, with two-bedroom apartments experiencing a more significant decline of about 20%. This decrease underscores the importance of the short-term rental market as a demand determinant for housing in the affected areas. The data suggests that the anticipation of the ban led to a spike in registrations just before its implementation, indicating that property owners were keen to capitalize on the short-term rental market before the restrictions took effect.

The research also highlights that the number of sold houses declined in the neighborhoods impacted by the ban, although this effect was not statistically significant. This suggests that the removal of the option to rent properties on a short-term basis may have depressed demand in those areas. The study also reports that there were no spillover effects observed in control neighborhoods, meaning the policy did not adversely affect nearby areas.

The authors employed a difference-in-differences estimation strategy to analyze the impact of the ban. They compared treated neighborhoods with control neighborhoods where the ban was not yet implemented. This method enabled the authors to isolate the effects of the short-term rental regulations from other variables influencing the housing market.

The findings from this paper contribute to the ongoing discourse on housing affordability and sustainable urban development. They suggest that short-term rental markets can significantly influence housing prices, especially in popular tourist destinations. The implications of the study are relevant for policymakers considering similar regulatory measures in other European cities facing housing market pressures due to the proliferation of short-term rentals.

This research underscores the complex relationship between short-term rental regulations and housing markets. It reveals that while such policies can help manage the impacts of tourism on local housing, they can also lead to significant changes in property values and market dynamics. The evidence presented is crucial for understanding the broader context of housing affordability in cities experiencing similar challenges.