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Short-term renting of residential apartments. Effects of Airbnb in the Icelandic housing market

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  • Lúðvík Elíasson
  • Önundur Páll Ragnarsson

Abstract

This paper looks at the effects of recent growth in private renting to tourists on the net supply of housing and house prices in Iceland. The growth in private renting to tourists is documented and used to adjust estimates of housing supply. Data on actual bookings of apartments in the capital region of Iceland on Airbnb is used as an indicator for supply of housing to short term tourism rentals. This information is used to estimate the effects of short-term lodging on real house prices in Iceland as well as for making a suggestion for the measure of the residential housing stock. The contribution of the growth in the Airbnb market on real house prices is estimated at 2% per year over the last three years, or about 15% of the total increase in real house prices during that period.

Suggested Citation

  • Lúðvík Elíasson & Önundur Páll Ragnarsson, 2018. "Short-term renting of residential apartments. Effects of Airbnb in the Icelandic housing market," Economics wp76, Department of Economics, Central bank of Iceland.
    • Handle: RePEc:ice:wpaper:wp76
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    References listed on IDEAS

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    1. Libertad Gonzalez & Francesc Ortega, 2013. "Immigration And Housing Booms: Evidence From Spain," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 37-59, February.
    2. E. Kaloinen & J.M. Hannesson & Ö.P. Ragnarsson & H. Jónsdóttir & E.Þ. Þórarinsson, 2017. "The Central Bank of Iceland’s approach to stress testing the Icelandic banking system," Economics wp75, Department of Economics, Central bank of Iceland.
    3. Ágeir Daníelsson & Lúdvík Elíasson & Magnús F. Gudmundsson & Björn A. Hauksson & Ragnhildur Jónsdóttir & Thorvardur Tjörvi Ólafsson & Thórarinn G. Pétursson, 2006. "QMM A Quarterly Macroeconomic Model of the Icelandic Economy," Economics wp32, Department of Economics, Central bank of Iceland.
    4. James M. Poterba, 1984. "Tax Subsidies to Owner-Occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(4), pages 729-752.
    5. Stephen Sheppard & Andrew Udell, 2016. "Do Airbnb Properties Affect House Prices?," Department of Economics Working Papers 2016-03, Department of Economics, Williams College.
    6. Mark Merante & Keren Mertens Horn, 2016. "Is Home Sharing Driving up Rents? Evidence from Airbnb in Boston," Working Papers 2016_03, University of Massachusetts Boston, Economics Department.
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    Cited by:

    1. Cook, David & Kaji, Takeshi Benjamín & Davíðsdóttir, Brynhildur, 2023. "An assessment of the scope and comprehensiveness of well-being economy indicator sets: The cases of Iceland, Scotland and New Zealand," Ecological Economics, Elsevier, vol. 205(C).
    2. Časni Anita Čeh & Filić Josipa, 2022. "Tourism housing price nexus," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(2), pages 53-65, December.
    3. Emanuele Breda & Rita Cappariello & Valentina ROmano, 2018. "International tourism in Italy: recent trends, potential demand and a comparison with the main European competitors," Questioni di Economia e Finanza (Occasional Papers) 475, Bank of Italy, Economic Research and International Relations Area.
    4. Cong Liang & Matthew Chi Hei Yeung & Alan Kai Ming Au, 2022. "The impact of Airbnb on housing affordability: Evidence from Hong Kong," Environment and Planning B, , vol. 49(3), pages 1048-1066, March.

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