Abstract
Over the last decade, the emergence and significant growth of home-sharing platforms, such as Airbnb, has coincided with rising housing unaffordability in many global cities. It is in this context that we look to empirically assess the impact of Airbnb on housing prices in Sydney—one of the least affordable cities in the world. Employing a hedonic property valuation model, our results indicate that Airbnb’s overall effect is positive. A 1% increase in Airbnb density is associated with approximately a 2% increase in property sales price. However, recognizing that Airbnb’s effect is geographically uneven and given the fragmented nature of Sydney’s housing market, we also employ a GWR to account for the spatial variation in Airbnb activity. The findings confirm that Airbnb’s influence on housing prices is varied across the city. Sydney’s northern beaches and parts of western Sydney experience a statistically significant value uplift attributable to Airbnb activity. However, traditional tourist locations focused around Sydney’s CBD and the eastern suburbs experience insignificant or negative property price impacts. The results highlight the need for policymakers to consider local Airbnb and housing market contexts when deciding the appropriate level and design of Airbnb regulation.
Highlights
The rise of the sharing economy brought about by digital disruption is having a profound impact on how our cities function
Given equation (1) follows a log-to-log transformation of the dependent and explanatory variable, the baseline Ordinary Least Squares (OLS) model’s coefficient of 0.0844 (column (2)) implies a 1% increase in Airbnb density is associated with an 8.44% increase in sales price
Given ref. [16] noted that Airbnb activities resulted in a reduction of long-term rental supply, it is reasonable to expect an upward movement of rent and housing prices
Summary
The rise of the sharing economy brought about by digital disruption is having a profound impact on how our cities function. The enabling of the sharing economy through the internet, coupled with the rising demand globally for urban tourism (up 45% in the 132 most popular cities from 2009 to 2015), has provided the ideal market setting for Airbnb to cater to people’s growing desire to travel cheaply and authentically [2]. While initially hailed as an avenue to increase accessible, affordable housing, evidence from several global cities suggest that the informal housing options provided through Airbnb have instead exacerbated several urban housing issues. [5] found that short term rental (STR) platforms such as Airbnb typically rented to the more affluent sector of the rental market and provided limited affordable alternatives to formal rental stock. There is increasing criticism over the ramifications of Airbnb’s presence in the housing market, given housing affordability is already a critical concern in many urban areas where tourism thrives [6]
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