Airbnb and the housing market in Italy. Evidence from six Cities

We study how the growth of Airbnb has affected the housing market in six important Italian cities – Milan, Turin, Venice, Florence, Rome, and Naples. These cities differ in terms of tourist attractiveness, seasonality of visitors, business and industry vocation, and morphological constraints to their boundaries. Our empirical strategy accounts for omitted variable bias as well as for reverse causality. We apply an instrumental variable approach by using two alternative measures of cityspecific “touristiness” that vary within cities, according to the relevance of touristic attractions as reviewed by Tripadvisor and Lonely Planet, and over time, based on a measure of Airbnb popularity as proxied by GoogleTrends. We find that Airbnb density leads to increases in rents and sale prices, but the effect varies greatly across cities and, even more, within cities (centre and suburbs). For some cities this impact is virtually non-existent, even in the town centre; for some is weak or even negative, but for others is sizeable. However, the overall quantitative effect remains modest, thus suggesting that attempts to regulate home-sharing and short-term rentals (from this point of view) have to be calibrated with much attention.