The effects of tourism on housing prices: applying a difference-in-differences methodology to the Portuguese market

Purpose This paper aims to explore the effects of a surge in tourism short-term rentals (STR) on housing prices municipalities within Portugal’s two largest Metropolitan Statistical Areas. Design/methodology/approach study applies difference-in-differences (DiD) methodology by using feasible generalized least squares (FGLS) estimator seemingly unrelated regression (SUR) equation model. Findings The results show that liberalization STR had significant impact where higher percentage was transferred tourism. transfer led leftward shift supply and consequent increase prices. These price increases are much than those found previous studies same subject. authors also with more low elasticities, which indicates adjustments real estate from were made increasing house prices, not quantities. Practical implications suggests an unforeseen consequence allowing property owners use other services (namely, tourism) extreme due inelastic supply. Originality/value is first time DiD has been applied markets FGLS SUR model it produces precise estimates baseline OLS FE. find evidence shock provoked STR.