Home > Uncategorized > The value of capitals. Does Airbnb drive house price increases in London, Berlin, Dublin and Amsterdam?

The value of capitals. Does Airbnb drive house price increases in London, Berlin, Dublin and Amsterdam?

Since 2008, economic statistics have twisted my mind, again and again. One of the weird patterns shown by the data are comparatively very large and fast house price increases in capitals.

Look here for London.

Look here for Berlin

Look here for Dublin

Look here for Amsterdam

Look here for Paris

Is this caused by a large and fast increase in gross rental yields of houses enabled by the site Airbnb, which makes it a lot easier for international tourists to rent houses from individual owners, which leads to a rapid increase of potential gross rental yields of existing houses? According to a recent article in De Volkskrant, a Dutch newspaper, this is at least one of the reasons why house prices are increasing in Amsterdam, not just because individuals are enabled to let their houses but also because new companies are very rapidly using Airbnb to enter this market (especially in the center of cities) which leads to house price increases – increases which are consistent with the fact that tourism is one of the few growth sectors in Europe, at the moment. Look also here, for Venice (Italy).

If this hypothesis is right, these price increases are no sign of a property bubble.

 

  1. Macrocompassion
    August 31, 2014 at 5:22 pm

    The reason for this rise in house prices is the same as in any other economic phenomena of changed prices–simply that it follows the demand. Obviously there are insufficient houses and with many homeless those who still have a place of their own can (should they want) allow it to creat a high demand price on the holiday market.

    It is strange that no more houses are being built until one realizes that the lack of suitable sites of land is the reason. This is strictly controlled both by the municipilities (who favour high prices and associated “Arnona” taxes) and by the speculators in land values (particularly those who get support and loans from banks). These animals are busy holding useful sites out of use so that their demand grows and their prices in a few years rise.

    The answer is one that most governments seem not to be aware of, or if they are, to reject as being harmful to their friends in high places with the power to limit progress and to gain from unjustified profit instead. Henry George (in 1879, “Progress and Poverty”) suggested 135 years ago that a tax on land values instead of all the other kinds of productive operations, would encourage the fair, morally just and rightful use of the land. BUT MOST GOVERNMENTS SEEM TO BE UNAWARE THAT WITH ONE STROKE THIS WOULD BRING AN END TO POVERTY AND GREAT PROGRESS INSTEAD.

    So don’t be so surprised when you small bit of home acre suddenly gets a offer from a speculator, and also if it is being sought by somebody who wants to rent it to a tourist at twice the going rate.

  2. September 2, 2014 at 12:48 am

    Governments exist primarily to protect unequal property.
    That might be ok if only inequality in earned income (from labor) were protected. However, government now looks a lot like these (and many other enlightenment / “social contract”) quotes:

    “50. … the consent [sic] of men have agreed to a disproportionate and unequal possession of the earth
    “124. The great and chief end, therefore, of men uniting into commonwealths, and putting themselves under government, is the preservation of their property
    “126. … in the state of Nature … They who by any injustice offended will seldom fail where they are able by force to make good their injustice.” [is it any different under government we’ve known?]
    [Locke, Second Treatise of Government (1689), ch 5, 9]

    “V.1.55 It is in the age of shepherds, in the second period of society [first being hunters], that the inequality of fortune first begins to take place, and introduces among men a degree of authority and subordination which could not possibly exist before. It thereby introduces some degree of that civil government which is indispensably necessary for its own preservation … The rich, in particular, are necessarily interested to support that order of things which can alone secure them in the possession of their own advantages. Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs.
    All the inferior shepherds and herdsmen feel that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority depends upon that of his greater authority, and that upon their subordination to him depends his power of keeping their inferiors in subordination to them.”
    [Adam Smith, The Wealth of Nations (1776), bk V, ch 1]

    • merijnknibbe
      September 2, 2014 at 8:35 am

      Even David Graeber, in his ‘Debt, the first 5.000 years’ falls into the private property trap when he cites the example of a Inuit hunter who, strange, strange, does not trade the seal which he has hunted but (the horror) *shares* it (as Graeber states it: gives it away). /But this hunter does not give anything away.THIS SEAL NEVER WAS PRIVATE PROPERTY IN THE FIRST PLACE AND CATHCING IT DIDN’T MAKE IT SO. Remember the phrase ‘free game’? Anglosaxon economists seem however to be thus occupied with private property that they – yes, Graeber too… – seem to have congnitive difficulties with imagining other kinds of property, or non-property. On the Marginal Revolution blog Tyler Cowen once linked to an article which established that hunter-gatherers were, strange, strange, much more rational towards using and bartering ‘material objects'(not: ‘possessions’, the english language indeed is somewhat less fit to describe non- or shared property) then related city and village dwellers who owned objects. However – might it be that it’s the very concept of property and ‘possession’ (not too prevalent in hunter-gatherer societies) which makes people less rational, not to say: ‘possessed’? Which does not mean that I’m against private property. Surely and absolutely not! But it’s only one of many constructs of (non-)property and it’s *not* the ‘natural’state of human society (supposing something like that exists).

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