Airbnb frenzy: locals say they’re being priced out

An Airbnb listings boom in Cape Town is drawing flak from residents who say they are being priced out of their own city.

Some top apartment blocks are clamping down on Airbnb, amid calls for the government to impose restrictions. Eventide in Clifton, considered one of the city’s most prestigious apartment blocks, has blocked short-term rentals, as others impose minimum stay lengths, including in Johannesburg.

Cape Town now has more listed Airbnbs — 23,564 — than several popular global destinations, including Barcelona, Tokyo and San Francisco. It has almost twice as many as Florence, Athens and Berlin.

Tourism minister Patricia de Lille said the Tourism White Paper, now out for public comment, included proposed regulation of short-term rentals. It makes provision for the minister to more tightly regulate the industry and duration of stays.

“Once we have incorporated all the comments, I will take the matter to cabinet for consideration,” De Lille said.

Lance Cohen from Lance Cohen Properties said many body corporates in Cape Town now barred rentals shorter than three or six months. “There is a major shortage of rentals for locals. It is becoming too expensive for people who live in Cape Town to rent places.” Apartment blocks that are limiting short-term rentals include Bantry Hills and Clifton Terraces, he said.

The upsurge in listings stems from high demand for holiday accommodation over the summer season when apartments in some areas fetch R3,000-R4,000 a day, or about R200,000 for the two-month season. The potential profits have pushed many homeowners into the short-term rental market, resulting in fewer options for locals seeking long-term leases.

Investors, including foreigners, are purchasing properties specifically to target the short-term rental market, with some new developments featuring micro-apartment designs. The result for many local residents is prohibitively high property and rental costs.

Clive and Eileen Horwood lived in state-owned accommodation at Da Gama Park near Simon’s Town. Now their government service is over they have to move, but find themselves priced out of the local market. “Our families don’t have space for us,” said Eileen.

Said Clive: “I can only hope the government will curb these Airbnbs and give the locals the opportunity to buy decent houses near their places of work, because the cost of transport is also killing the average man.”

There is a major shortage of rentals for locals. It is becoming too expensive for people who live in Cape Town to rent places

—  Lance Cohen

A Johannesburg family described similar frustration over their offer to purchase in Hout Bay being trumped by foreign buyers. “We weren’t putting in lower offers, we were pre-approved for financing, we did everything as quickly and efficiently as we could and still we were coming up short every time.”

But many business stakeholders, including Airbnb, said pressure on supply should be weighed against the economic benefit of increased tourism. A recent survey showed Airbnb’s contribution to GDP exceeded R23.5bn in 2022, more than doubling its 2019 impact, according to the Federated Hospitality Association of South Africa (Fedhasa).

The Airbnb surge is partly a response to rebounding international tourism and an influx of digital nomads working remotely. The property market faces additional pressure due to semigration from elsewhere in the country.

Critics say that, in addition to driving up prices, the fast-growing digital platform accentuates existing inequality by effectively locking out previously disadvantaged residents from what were previously “whites only” areas.

Urban policy researcher Nick Budlender from social justice nonprofit Ndifuna Ukwazi said government efforts to increase the supply of affordable housing are being eroded by recent market dynamics. “Unfortunately, the extreme rental price inflation and strangulation of housing supply that is driven by platforms like Airbnb is heavily eroding these gains as even people that are well-off by Cape Town’s standards are now being entirely priced out of the central city and surrounds,” he said.

“Short-term rentals exacerbate our housing crisis because they shift the main purpose of housing from the provision of shelter towards the extraction of money.”

The Airbnb influence is a global phenomenon. Portugal introduced legislation last year to increase the availability of long-term rental units. Earlier this month thousands of mass-tourism protesters fired water pistols at tourists in Barcelona to draw attention to high prices.

“I think it’s concerning that Cape Town is nowhere near reaching its goal to transform the city and contest the legacies of spatial apartheid,” said Simone Cupido, researcher and senior project officer for Slum Dwellers International. “It’s a city in which apartheid legacies are alive and well and inequality is visible.”

The pushback against Airbnb from body corporates in Johannesburg is affecting property stakeholders. “It has become a bit of a challenge for us,” said Michelle Cohen, real estate principal at Leapfrog Property Group, Johannesburg North East. “People will buy with the intention to do Airbnb and then all of a sudden those who run the body corporate will impose rules. You get considerably less when you put in a one-off tenant than you do with Airbnb.”

Cohen said the solution was developments geared specifically for Airbnb, such as the newly built 125 on Hilton in Linbro Park.

Airbnb is also popular in tourist spots such as Bela Bela in Limpopo and Impendle in KwaZulu-Natal.

In August last year De Lille signed a memorandum of understanding with Airbnb in a joint initiative setting up a national registration system for short-term rentals and an Airbnb Entrepreneurship Academy for skills development.

Fedhasa national chair Rosemary Anderson said there was much to gain from Airbnb: “The platform has generated approximately 50,000 jobs in South Africa, providing vital employment opportunities in a country grappling with high unemployment.”

Airbnb declined to answer specific questions but offered a broad response: “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. Half of hosts on Airbnb in South Africa say the additional income from hosting helps them to afford rising living costs and stay in their homes, and we have long led calls for new rules that give local authorities the tools they need to know what is going on in their communities and take action when needed.”

Cape Town city authorities this week said they were pushing ahead with the release of well-located land for affordable housing, with central Cape Town land so far yielding 4,900 housing units “and many more to come close to economic opportunities around the metro”.