Key points
- Every 1 percent more Airbnb listings raises rents by around 0.02 percent, compounding in touristed districts.
- Shops specialise in visitors and the neighbourhood stops working for residents.
- New York cut whole-home listings by more than 80 percent by requiring the host to be present.
Airbnb changes the city by changing who lives in it: when a building's letterboxes carry numbers instead of names and its stairs echo with suitcase wheels at dawn, the architecture is intact but the neighbourhood has gone. Short-term rental platforms, born in 2008 as a way to let out a spare room, have become a professional market of millions of whole homes withdrawn from residential use, and the evidence from academic studies and municipal data converges on three effects: rents rise, local shops give way to tourist retail and the everyday ties that make a street a community dissolve. The question is not how many tourists a city can hold but when a neighbourhood stops being one.
How short-term rentals raise rents and empty homes
The housing mechanism is simple. A flat let by the night to visitors earns two to three times what it earns let by the month to residents, so owners who can convert do, and the supply of residential rentals shrinks. With fewer homes available, prices rise for everyone. Barron, Kung and Proserpio estimated across American cities that every 1 percent increase in Airbnb listings raises rents by around 0.02 percent, an effect that compounds in the most touristed districts. Wachsmuth and Weisler showed in 2018 that the platform opens a rent gap that draws investors into historic centres and accelerates gentrification, with commercial hosts owning multiple listings capturing most of the revenue.
From the bakery to the luggage locker: shops and social ties
The second effect is on shops and services. When a large share of the homes on a street turn over every few days, the bakery, the pharmacy and the school lose their stable customers and are replaced by souvenir shops, brunch cafés and luggage lockers. The neighbourhood specialises in serving visitors and stops working for residents. Venice, Lisbon and central Barcelona have lost population in their historic districts while multiplying tourist beds, and their residents describe feeling foreign on their own street. The third effect is the hardest to measure and the most felt: parties in flats without permanent neighbours, key boxes on every doorway, and stairwells where nobody knows anyone erode the networks of care and trust that make a building liveable.
Night caps, host presence and licence expiry: what cities have done
Cities have responded with increasingly strict rules. Amsterdam limits whole-home rentals to thirty nights a year and Paris to 120. New York has required since 2023 that the host be present during the stay, which cut whole-home listings by more than 80 percent. Berlin bans tourist use without a licence, and Barcelona announced in 2024 that it will not renew any of its roughly 10,000 licences after 2028. The European Union adopted in 2024 a regulation obliging platforms to share registration data with authorities, the precondition for enforcing any rule. Where enforcement is weak, listings simply move to unregistered channels; where data flow, the rules bite.
Registers, data and fines: what works and what does not
Airbnb is not the only cause of the housing crisis, but it is one of the fastest to correct, because it depends on local decisions about licences, registration, night caps and inspection. The cities that have acted show that tourist accommodation can be kept in dedicated buildings while homes return to people who need them to live. The experience also shows what does not work: voluntary agreements with platforms, caps without registration and rules without data. The instrument that matters is the register linked to the platform, backed by fines high enough to change the calculation of converting a home.
The underlying choice is about priority of use. A city has to decide whether the flat above the bakery serves a visitor for three nights or a family for thirty years, and whether the street exists for the people who pass through or for those who raise children, work and grow old on it. Airbnb made that choice visible one letterbox at a time; the regulation now spreading across Europe and North America is the attempt to make it again, on purpose, in favour of neighbours.
Frequently asked questions
Why does Airbnb raise rents?
Because a flat let by the night to tourists earns two to three times what it earns let to residents, so owners convert, the supply of residential rentals shrinks and prices rise for everyone in the neighbourhood.
How do cities regulate short-term rentals?
With annual night caps such as Amsterdam's thirty or Paris's 120, host presence requirements as in New York, non-renewable licences as in Barcelona from 2028 and, in the European Union, a regulation forcing platforms to share registration data with authorities.
