The rapid growth of Airbnb in Cape Town is raising concerns about its potential inflationary impact on the city’s property market, threatening affordability for local residents.
As Cape Town becomes a global tourist hotspot, many property owners are opting for short-term rentals through platforms like Airbnb, driving up demand and prices.
This trend mirrors the challenges faced by cities like Barcelona, where Airbnb’s rise has been linked to rising property prices, gentrification, and displacement of long-term residents.
In 2024, Cape Town has already seen an influx of foreign visitors, with tourism numbers recovering strongly after the pandemic.
This has significantly boosted the short-term rental market, particularly in areas like the City Bowl and Atlantic Seaboard, where Airbnb listings have surged by 190% since 2022.
The average property price in the city now stands at over R2.23 million, a significant increase from R1.63 million in 2014, representing over 36% growth.
However, this popularity among tourists has a darker side.
The shift from long-term rentals to short-term leases on platforms like Airbnb is reducing the availability of housing for locals, pushing up rental and property prices.
For example, in Cape Town’s city centre, rental yields from short-term leases are far higher than long-term options, creating an incentive for landlords to list their properties on Airbnb instead of offering them to permanent residents.
This reduces housing stock, driving prices beyond what many local families can afford.
One of the most significant risks is that this trend could worsen the already steep property price inflation in the city.
Data from over 190,000 property sales registered with the deeds office in 2024 so far already show concerning trends.
The data shows that the national average price for a home in South Africa is currently R972,200.
However, the average price of a home in the Western Cape (WC) is almost double that at just over R1.6 million.
The only other province with an average property price over R1 million is KwaZulu Natal, but it is still far behind the WC at R1.05 million.
“We have a huge housing shortage in South Africa – pair that with affordability issues, and one has to question the sustainability of this residential rental model in South Africa,” said commercial property broker Ash Müller.
The Sunday Times reported that the listings boom in Cape Town is drawing flak from residents who say that they are being priced out of their own city.
Data from Inside Airbnb, a collaborative data effort that reports on the expansion of Airbnb globally, shows that there are 23,564 active listings in Cape Town.
Of this, 19,280 (81.8%) are entire home/apartment listings, 4,062 (17.2%) are private rooms, 79 (0.3%) are shared rooms, and 143 (0.6%) are hotel rooms.
This already surpasses the number sported across numerous popular tourist destinations, such as San Francisco (7,888), Amsterdam (9,310), Athens (13,274), Berlin (13,759), Sydney (15,548), Tokyo (16,518), and Barcelona (18,925).
As more property owners turn to Airbnb, Cape Town risks replicating the experiences of cities like Barcelona, where the unchecked expansion of short-term rentals has contributed to housing shortages.
Moreover, the negative social effects are becoming more apparent. Gentrification in popular neighbourhoods, including Sea Point, Green Point, and De Waterkant, has forced long-term residents to move out as landlords shift focus to short-term profits from Airbnb.
In Barcelona, the local government has had to impose strict regulations, including a ban on new short-term rental licenses and heavy fines for illegal listings, to curb the negative effects of Airbnb on housing affordability.
However, Airbnb argues that its services contribute far more good than the risks that it poses.
The company noted that listings on Airbnb account for less than 3% of housing in Cape Town, and a typical host in Cape Town shares their home for an average of just 38 nights in an entire year.
Additionally, an Airbnb survey asked over 1,800 South African hosts and guests on the platform about user trends they had noticed.
50% of respondents said they could not afford the rising cost of living, with more than one-third saying they need additional income.