Short-term rentals and housing prices on the Costa Blanca (Spain): A panel Granger causality analysis

The relationship between Short-Term Rentals and home purchase and rental prices is a hot and controversial research topic. This note analyzes the relationship between Short-Term Rentals, Purchase Prices, and Rental Prices of residential properties on the Costa Blanca (Spain). Using panel data techniques, the relationship between these variables is examined across 20 tourist municipalities for the period 2014–2024. The results suggest that the only consistent relationship operating in this context is from purchase prices to rental prices, which is consistent with an asset-pricing mechanism. Also, a short-term reverse causality from rental to purchase prices emerges at 6 months, suggesting an investment channel in which rental yield signals influence acquisition decisions. Conversely, limited evidence of the influence of short-term rental properties is found. These results raise doubts about the effect that regulations on short-term rentals may have on facilitating access to housing in these tourist destinations.