The Uneven Effect of Airbnb on the Housing Market. Evidence Across and within Italian Cities

We investigate whether the diffusion of Airbnb reduces or exacerbates the differences between central and suburban areas by affecting residential property values. We leverage on the strong heterogeneity of five Italian cities in terms of tourist vocation, local housing markets and socio-economic conditions. We find that Airbnb growth leads to an increase in sale prices overall, but the impact differs both across and within cities. We also find evidence of spillover effects. In Milan and Rome, where the centre-periphery contrast is greater, Airbnb growth in the centre widens the existing gap between property values. In Florence, where initial disparities are smaller, house prices tend to converge over time. Our findings suggest that the growth of online rental platforms may contribute to a spatial dimension of inequality between the centre and the periphery, widening large gaps and reducing small ones, based on the initial conditions - income inequality, owner-occupancy, local housing markets - of the areas