The Virus that devastated Tourism: The impact of Covid-19 on the Housing Market

ABSTRACT

We study the causal impact of the negative shock on short-term rentals caused by covid-19 in the tourist-intensive city centre of Lisbon. Our difference-in-differences strategy uses a parish-level treatment relying on the pre-pandemic intensity of short-term rentals, using data between Q3 2018 and Q3 2020. The results suggest that landlords relocated properties into the long-term rental market, in which prices de-crease 4.1%, while listed quantities increase 20% in the treated civil parishes vis-`a-vis comparison ones. We also find evidence of an incremental negative impact on sale prices of 4.8% in treated areas. Our results are robust to the inclusion of Porto.

WITH

Mafalda Batalha, Nova School of Business and Economics, Universidade Nova de Lisboa, Portugal
Duarte Gonçalves, Nova School of Business and Economics, Universidade Nova de Lisboa, Portugal

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About Authors

Susana Peralta

Nova Faculty Affiliate

Susana Peralta holds a PhD in Economics from the Université Catholique de Louvain, in Belgium. Her research focuses on the economics of multi-layered governments, including tax competition and political economy issues.

João Pereira dos Santos

External Faculty Affiliate

João Pereira dos Santos holds a PhD in Economics from Nova SBE. He is a researcher at Queen Mary University of London, a research affiliate at IZA and a research fellow at the Kiel Institute for the World Economy and the RWI – Leibniz Institute for Economic Research.