The Headline: 10 Years, 12 Cities, One Uncomfortable Pattern

Before diving into the theory and the city-by-city evidence, here is the central finding in one chart. Each bubble is a city. Its horizontal position shows how aggressively it cut short-term rental supply. Its vertical position shows cumulative rent change over the same period. If crackdowns worked, you would expect the bubbles to drift down as they move right: bigger listing cuts leading to falling rents. That is not what happened.

The Economics: Why Short-Term Rentals Affect Rents

The mechanism is straightforward. When a property owner can earn more renting to tourists on a nightly basis than to a long-term tenant on a monthly lease, a rational economic incentive exists to convert residential housing into short-term accommodation. This conversion reduces the supply of long-term rental housing. Reduced supply, in the context of stable or growing demand, pushes rents upward.

This is not a theoretical abstraction. In Cape Town's Sea Point, for example, a two-bedroom apartment renting long-term at R18,000 per month might generate R2,500 to R3,500 per night on Airbnb during peak season. Even at a conservative 60% occupancy rate, the short-term yield dwarfs the long-term lease. The financial calculus is clear, and it has reshaped entire neighbourhoods.

The Three Channels of Impact

Economists identify three distinct pathways through which short-term rental platforms affect housing markets:

That finding, from the most-cited study in this field, merits unpacking. At first glance, 0.018% sounds trivial. But Airbnb listings in popular tourist cities were not growing by 1% per year during the platform's explosive expansion from 2014 to 2019. They were growing by 30%, 50%, sometimes 100% annually in hotspot neighbourhoods. At those rates, the cumulative rent impact compounds significantly, and it concentrates geographically in exactly the areas where displacement is most painful: historic centres, waterfront districts, and cultural quarters.

The Landmark Research: What the Data Shows

The academic evidence on short-term rentals and housing markets has matured substantially since 2018. What began as a handful of city-specific studies has become a robust, multi-country body of literature. Here are the findings that policymakers are actually citing.

The Barron, Kung & Proserpio Study (2021)

This US-wide study, published in Marketing Science (full paper), used instrumental variables and a comprehensive dataset of Airbnb listings to demonstrate a causal relationship between STR growth and housing costs. Its critical finding was not just that prices rise, but why: the total housing stock does not change, but Airbnb increases the number of units held for short-term use while decreasing units available to long-term renters. The effect is strongest in areas with lower owner-occupancy rates, which is consistent with absentee landlords and investors driving the conversion.

The European Parliament Study (2025)

In September 2025, Professor Claire Colomb of the University of Cambridge authored a major study for the European Parliament's Special Committee on the Housing Crisis (PDF). It framed the issue definitively: in tight housing markets, STR growth has contributed to a decrease in long-term rental supply, added to the existing rise in rental and sale prices, and fuelled displacement of long-term residents. A peer-reviewed analysis of 16 European cities found that housing preservation was the primary regulatory driver in Amsterdam, Berlin, Vienna, Brussels, Madrid, and Paris.

The Counterargument: Airbnb-Commissioned Research

The other side of the evidence base deserves honest treatment. An Oxford Economics study commissioned by Airbnb found that STRs represent less than 0.5% of housing stock in major European cities and that returning all listings to the residential market would reduce prices by less than 0.7%. This study also highlighted that STRs generated €149 billion in economic impact and supported 2.1 million jobs across the EU in 2023.

New York City: The World's Strictest Crackdown

If you want to understand the limits of regulation, look at New York. Local Law 18, passed in January 2022 and enforced from September 2023, is the most aggressive STR restriction implemented by any major global city. It requires hosts to register with the city, be physically present during guest stays, and host no more than two guests at a time. Entire-apartment rentals for fewer than 30 days are effectively banned.

The results were dramatic and immediate.

The listings collapse was real: Airbnb went from around 22,000 active short-stay listings in August 2023 to roughly 2,300 by early 2024. Many landlords did convert former STRs to long-term leases, particularly in Manhattan and Brooklyn. But citywide, vacancy rates remained flat at 1.9%. Rents continued to climb. By September 2025, average rents had risen 8.1% and hotel costs 12.6%, triple the national hotel price increase.

Who Actually Lost?

The outer boroughs bore the brunt. Listings outside Manhattan dropped from roughly 17,000 to 1,400, reducing guest arrivals by an estimated 80,000 per month. Small businesses in Brooklyn, Queens, and the Bronx lost the tourist foot traffic that STRs had dispersed beyond midtown. An Airbnb-commissioned report estimated the city could see $2.5 billion less in Airbnb-related spending and the loss of over 21,000 jobs.

Meanwhile, the hotel industry had a banner year. New York recorded the highest revenue-per-available-room increase of any top-25 US hotel market in 2024. Critics, including civil rights organisations and outer-borough homeowners, argue that LL18 effectively transferred wealth from small hosts and community businesses to the hotel industry.

Barcelona: The Total Ban

Barcelona is going further than any city in history. In June 2024, Mayor Jaume Collboni announced a plan to revoke all 10,101 short-term rental licenses by November 2028. In March 2025, Spain's Constitutional Court upheld the city's authority to proceed. By 2029, no homes will legally function as tourist accommodation in Barcelona.

The context is intense. Over the past decade, Barcelona's rents increased by roughly 68% while salaries rose by just 38%. Historic neighbourhoods like Ciutat Vella, Gràcia, and Eixample saw traditional bakeries and butchers replaced by souvenir shops and bicycle rental outlets. The anti-tourism backlash culminated in 2024 when residents sprayed tourists with toy water pistols, an image that became a global symbol of community resentment.

The Implementation Timeline

Will It Work?

Barcelona's industry association (APARTUR) argues the ban is futile: tourist apartments represent only 0.77% of the city's total housing stock, yet rents kept climbing even while licenses were capped since 2014. The European Holiday Home Association has warned the measure may breach the EU's Services Directive.

Supporters counter that Barcelona's approach is legally grounded in Spain's constitutional right to housing (Article 47), and that the goal extends beyond rent reduction: it is about restoring neighbourhood character, reducing noise and overcrowding, and reversing the hollowing-out of residential communities. Barcelona is explicitly framing this not just as housing policy but as a reclamation of the city's identity for its permanent residents.

Paris, Berlin, Amsterdam, Lisbon: Four Models, Mixed Results

Paris: The Compensation System

Paris has taken a different approach from outright bans. The city enforces a registration requirement and a cap on primary-residence STRs (reduced from 120 days to 90 days per year from January 2025, under the Loi Le Meur). Secondary residences require "change of use" authorisation, which involves a costly compensation mechanism: owners must convert an equivalent area of commercial space to residential use. In central arrondissements, this costs €300 to €500 per square metre, meaning €15,000 to €25,000 for a typical 30-square-metre studio.

Fines are severe: up to €50,000 for renting a secondary residence without authorisation, €10,000 for exceeding the day limit. A dedicated enforcement brigade monitors compliance. France has also enacted a nationwide energy-efficiency requirement: from 2025, properties with a G-rated energy performance cannot be listed; F-rated properties will be banned by 2028.

Berlin: The Pioneer

Berlin's Zweckentfremdungsverbot (prohibition of misuse of residential space), introduced in 2016, was one of the earliest major STR regulations globally. Fines can reach €500,000, among the highest in Europe. Secondary residences are capped at 90 nights per year; primary residences require a district permit. From May 2026, a new national law will require platforms to automatically report rental data to German authorities, closing the information gap that plagued early enforcement.

A 2024 study found that Airbnb's presence raised Berlin rents by 1.3% to 2.7% annually. The city had roughly 7,200 Airbnb listings as of mid-2025, down from much higher levels in the platform's early years, with 100% now holding short-term rental licenses. Berlin is also considering banning short-term furnished rentals (a loophole allowing medium-term tourist lets) in protected neighbourhoods (Milieuschutzgebiete).

Amsterdam: The Tightest Cap

Amsterdam caps primary-residence STRs at 30 nights per year, with proposals to reduce certain zones to just 15 nights from 2026. The effect on Airbnb listings has been dramatic: a 54% decline from 2019 to 2024. But broader STR market data tells a more nuanced story (White Sky Hospitality, April 2026). While Airbnb listings fell to around 4,830 by mid-2025, listings across all platforms actually increased from 6,015 to 8,199 between 2023 and 2025, suggesting displacement to other platforms rather than genuine market contraction.

Meanwhile, Amsterdam's long-term rents increased 34% between 2019 and 2024, rising faster than the 13% national average. Hotel occupancy remains near 80% with rising average daily rates. Amsterdam's experience highlights the "balloon effect": squeeze STRs in one area and the pressure finds other outlets.

Lisbon: The Cautionary Tale

Lisbon is perhaps the most instructive case for Cape Town. Both are mid-sized, tourism-dependent cities with historic centres under intense STR pressure. Lisbon began restricting STRs in 2019 under the Mais Habitação package. Since then, house price growth accelerated, with annual rental increases jumping from 5.7% to 9.2%. Property prices rose from roughly €3,000 per square metre in 2020 to €5,642 by mid-2025.

In December 2025, Lisbon actually reversed course and rolled back some restrictions after concluding they had failed to improve affordability (Airbnb newsroom). However, in a whiplash of policy, the city adopted new regulations in November 2025 establishing "absolute containment" zones (no new licenses) in any parish where STRs exceed 10% of housing stock, and "relative containment" where the ratio sits between 5% and 10%. Approximately 7,000 of 18,600 licences face revocation by summer 2026.

Vacancy Taxes: The Vancouver Model

While most cities have focused on regulating active STR listings, Vancouver attacked a different piece of the puzzle: empty homes. The city's Empty Homes Tax (EHT), introduced in 2017, levies an annual charge on residential properties that sit vacant for more than six months per year. The tax rate has risen from 1% of assessed value at inception to 3% in 2021, where it remains.

The results are among the most encouraging in global housing policy. (City of Vancouver 2025 report; C.D. Howe Institute analysis)

For the first time since the EHT's introduction, the number of vacant homes in Vancouver fell below 1,000 in the 2024 reporting year. The vacant homes rate has been declining steadily even as new housing stock (primarily condominiums) was added. Many formerly vacant properties entered the long-term rental market, increasing rental options in a tight market. The C.D. Howe Institute found 5,355 fewer vacant units in Vancouver from 2016 to 2021 than would have existed without the tax.

Why This Matters for Cape Town

Cape Town does not have a vacancy problem in the Vancouver sense: speculation-driven empty luxury condos are not the primary driver of the city's housing crisis. But the concept is transferable. A vacancy tax is a fiscal tool, not a regulatory tool. It changes the economics of holding property idle or in non-residential use without banning anything outright. It generates revenue that can be earmarked for affordable housing. And it is less politically contentious than bans or caps because it targets inactivity rather than activity.

The EHT has inspired similar taxes in Toronto (2021), Ottawa, Hamilton, Oakville, and at the federal level in Canada (the Underused Housing Tax Act). France introduced a vacancy tax in 1999, the UK in 2015, and Jerusalem and Catalonia in 2015. New York, Hong Kong, and Los Angeles are all considering variations.

Global Scorecard: What Worked and What Didn't

After a decade of experimentation, the evidence permits a clear assessment. No single policy has "solved" a housing crisis. But some interventions have demonstrably achieved specific objectives, while others have not.

The Real Success Stories

If "success" means improved housing outcomes for residents rather than simply fewer Airbnb listings, the scorecard narrows considerably. Only two interventions have delivered measurable housing benefits:

Cape Town: Where We Stand in 2026

Cape Town's position in the global STR landscape is unique and, in some ways, more extreme than the European cities that have dominated headlines. But the numbers need careful handling, because different sources count differently.

The 70% CBD Figure: What It Actually Means

The widely cited statistic that "70% of CBD residential units are Airbnb" requires context. The figure comes from the City of Cape Town's own Local Spatial Development Framework (LSDF), approved by council in October 2025. It states that 70% of residential units in the inner city "are either hotel managed or Airbnb." That area is defined as the Foreshore and CBD up to Orange Street, from Tennant Street to Buitengracht, including De Waterkant (Ward 115). In 2018, this area contained 8,327 residential units.

The critical detail: the 70% includes hotel-managed apartments (serviced apartments operated by hotel groups), not just Airbnb listings. Inside Airbnb counted roughly 5,662 listings in this area. If that figure is accurate, it means roughly half the residential units are STR-listed and the remainder are hotel-managed. Still extraordinary by global standards, but not "70% Airbnb." Airbnb itself cites a citywide figure of 0.9% of formal housing units being dedicated STRs. Both numbers are correct; they measure different things. The citywide average masks the hyperlocal crisis in the CBD, Sea Point, and De Waterkant, while the CBD figure combines STRs with hotel-managed stock.

What Cape Town Is Actually Doing

In February 2026, the City of Cape Town announced a draft Short-Term Letting By-law (full analysis on capetowndata.com). Despite media coverage describing it as a "tax hike on Airbnbs" (Bloomberg, Feb 2026), the city has stressed this is not a new tax. Under the existing Rates Policy, properties primarily used for commercial accommodation are already required to pay commercial rates. The by-law simply closes an enforcement loophole: many full-time STR operators have been paying residential rates while running what is effectively a commercial business.

The Bo-Kaap Dimension

Cape Town's STR debate has a displacement dimension that mirrors Barcelona's neighbourhood concerns. Bo-Kaap, the historic Malay Quarter at the foot of Signal Hill, has seen significant property acquisition by investors converting family homes into Airbnb listings. Long-standing residents have been priced out as property values soar. The Draft Code of Good Practice explicitly acknowledges displacement concerns and references the need for "sustainable" STR practices in culturally sensitive areas.

The Policy Toolkit: What the Evidence Supports

Drawing on a decade of global experience, here is what the evidence suggests works, what does not, and what Cape Town should prioritise.

Frequently Asked Questions