Short-term rentals and the housing market: evidence from Portuguese metropolitan areas

In this paper, we study the impact of short-term rentals (STR) on housing markets in Portugal, exploiting a 2014 policy reform that eased registration requirements. Using a novel dataset of property transactions from 2010 to 2017 for the Lisbon and Porto metropolitan areas, we estimate the effect of STR expansion using a two-way fixed effects model and a difference-in-differences design that leverages staggered treatment across postcodes. The analysis controls for detailed property characteristics, location and time fixed effects. We find that each additional STR per quarter and postcode raises transaction values by 2.3–6.0%, representing an average increase of €104–€329 per transaction. Effects are larger in higher-end market segments and in parishes with lower unemployment and population density. Event-study estimates show that effects emerge gradually and become significant around ten quarters after the first STR listing. We also find positive spillovers to commercial property values, particularly for retail stores, and in suggesting short-term rentals drive demand for local consumption amenities.