Is Airbnb increasing the housing prices? An empirical analysis for Palma de Mallorca

Abstract

Currently there is a strong concern about the cost of housing in tourist areas and large Spanish cities, especially rental. This work tries to measure the impact of Airbnb on the selling and rental prices of housing for the Spanish city Palma de Mallorca. To achieve the purpose of the work, a cross-sectional database is used to estimate a hedonic price model, controlling the main characteristics of the housings. We show that a one-unit increase in the number of Airbnbs generates an increase in close housing rents of between 0.11% and 0.66%. Similarly, the presence of an additional unit of Airbnb is also associated with an increase in the housing sale price of between 0.36% and 1.65%. Such effects are stronger as the distance between Airbnbs and houses is smaller.