Housing Affordability, Tourism Activity and Income Inequality: Friends or Foes?

Dimitris Anastasiou (), Panayotis Kapopoulos and Kalliopi Maria Zekente
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Dimitris Anastasiou: Athens University of Economics and Business, Oikonomiko Panepistemio Athenon Athens
Panayotis Kapopoulos: Alpha Bank
Kalliopi Maria Zekente: Alpha Bank

Open Economies Review, 2025, vol. 36, issue 4, No 9, 1255-1280

Abstract: Abstract Previous evidence indicates that an increase in tourism is associated with both an increase in house prices, as it shifts leftwards the housing supply for domestic tenants and buyers, and an increase in income, as it generates significant positive externalities and spillover effects that stimulate job creation. The empirical evidence obtained from a panel of 38 OECD countries indicates that a rise in tourism activity, measured by either tourist arrivals or receipts, has a significant negative impact on housing affordability. Additionally, our findings suggest that this adverse effect is more pronounced in economies that rely heavily on tourism, while the impact of tourist arrivals on housing affordability is more substantial in countries with higher GINI coefficient (income inequality) and higher homeownership rates (non-financial wealth inequality). More specifically, the interaction of income and wealth inequality with tourism activity magnifies the positive impact of tourism on housing affordability. Our results remain unaffected by a battery of robustness checks and alternative specifications, providing important socio-economic policy implications.

Keywords: Tourism activity; Housing affordability; OECD countries; GMM estimation; Inequality (search for similar items in EconPapers)
JEL-codes: C13 R30 Z3 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11079-024-09793-2

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