Airbnb and its potential impact on the London housing market

Abstract

This article identifies proxies which account for the impacts that the Airbnb platform is having on housing in Greater London. We identify these by analysing the relationships between possible Airbnb misuse and the attributes of housing in the same locations. We assume misuse when listings of entire properties within the Airbnb platform do not conform with local regulations and where hosts who offer such housing have multiple listings. In particular, we examine (1) the dwelling type based on building typology; (2) the type of housing tenure, whether it is owned or rented; and (3) the spatial distribution of changes in rent payable. Three important findings emerge from our analysis. First, based on 2018 data, we estimate that more than 2% of all properties in London, and up to 7% in some local areas are being misused through Airbnb as short-term holiday rentals. Second, the location of these particular Airbnb rentals is negatively correlated with the diversity of dwelling types and positively correlated with dwelling type such as an apartment (or flat) in areas of high private rental stock. Last, we show that a 100% increase in the density of possible Airbnb misuse can be associated with up to an 8% increase in unit rental price per-bedroom per-week, an equivalent to up to an average of £90 price increase per year. Finally, we discuss how this type of analysis can help build instruments to inform policies associated with the platform economy in relation to increasing polarisation in the London housing market.