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How Big Is the Airbnb Rent Premium? The Case of Sydney

Author

Listed:
  • Miriam Steurer
  • Robert Hill
  • Norbert Pfeifer

Abstract

The rapid expansion of Airbnb has led to concerns that it is crowding-out long-term rentals. We consider how strong is the incentive for landlords to switch properties to Airbnb. The Airbnb rent premium is defined here as the ratio of what a landlord can charge on Airbnb versus inthe long-term rental market. Using hedonic regression methods applied to micro-level data on long-term rentals (about a million observations) and Airbnb listings (about 190,000 observations), we calculate the size of the Airbnb rent premium for all the properties in our datasets. On average we find that landlords can earn about 90 percent more per week on Airbnb than in the long-term rental market. The premium is even larger for properties with three or more bedrooms. We find some evidence of a higher Airbnb premium in more expensive postcodes, and those with a higher Airbnb density. We also find that the Airbnb rent premium decreases slightly from 2015 to 2017.

Suggested Citation

  • Miriam Steurer & Robert Hill & Norbert Pfeifer, 2019. "How Big Is the Airbnb Rent Premium? The Case of Sydney," ERES eres2019_243, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2019_243
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2019-243
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    More about this item

    Keywords

    Airbnb density; Airbnb rent premium; Hedonic regression; Sharing Economy; Size premium;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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