The Impact of Regulations on Short-Term Rentals in the Basque Country[L’impact des régulations sur l’activité de location de courte durée au Pays Basque]

This paper evaluates the impact of short-term rental regulations in the 24 municipalities of the French Basque Country classified as high-pressure areas over the 2016–2024 period, using monthly AirDNA data and the Synthetic Difference-in-Differences (Synthetic DiD) method, with a heterogeneity approach distinguishing major tourist hubs, small seaside resorts, and inland municipalities. The first regulation, implemented in January 2020 and based on mandatory registration and prior authorization for change of use, led to a significant decrease in the number of active listings, booked nights, revenue, and average daily rate. The number of nights per listing remained stable, indicating that the adjustment occurred primarily through the withdrawal of supply rather than a reduction in usage intensity. However, with the net flow of listings remaining positive, this regulation acted mainly as a formalization mechanism, regularizing previously informal rentals and thereby enhancing transparency and the visibility of rental returns. This process can paradoxically increase the attractiveness of real estate investment, by making returns more observable and activity less uncertain, which may attract additional investors and exert upward pressure on residential housing prices, particularly in the most touristic areas. The second regulation, introduced in March 2023 and combining change-of-use authorization with a compensation requirement, including for listings already on the market, resulted in a more pronounced and lasting contraction of activity, with net withdrawals confirmed by data from other platforms (e.g., Vrbo), excluding a simple inter-platform shift. Overall, the two measures play complementary roles: the first structures and formalizes the market, while the second directly reduces the quantity of listings. Neither regulation, however, leads to a significant short-term decrease in residential housing prices, highlighting the complexity of adjustments in real estate markets within high-pressure tourist areas.