Short-term rentals heat up the housing market

The disruption from the wave of short-term rentals

Short-term rental services have long been known for their positive impacts on the tourism and service industries, from providing tourists with flexible and affordable accommodation options to increasing revenue for the local economy . However, in addition to the benefits, this type of service also entails many legal and security risks... and especially causes disruption to the housing market in many countries.

Bremer Bay, Western Australia, with its idyllic beaches and beautiful flower fields, is a popular tourist destination. But the impact on residents and essential services is not small.

"Electricity, water, planning for the future and connectivity are big issues as tourists flood in. Most business owners have to provide their own backup power," said Joanne Iffla, a business owner in Bremer Bay, Australia.

Ms. Iffla - Chairwoman of the regional council and also a local business owner said that the development of tourism has caused the number of short-term rentals to almost equal the number of long-term rentals. This has caused rents to rise, leaving businesses with no choice but to provide their own accommodation for workers.

"If we can't find housing in town for our employees, we won't be able to open. That's the price of doing business in Bremer Bay," said Joanne Iffla, a business owner in Bremer Bay, Australia.

It’s not just Australia that’s facing the same situation. In the Montmartre neighborhood of Paris, which welcomes 11 million tourists a year, housing prices have risen 19% in the past decade, making it harder for locals to afford. This has been accompanied by rising prices and the disappearance of many essential services.

Ms. Anne Renaudie - Parisian, France said: "Now we only have two or three butcher shops, two cheese shops. All have gradually disappeared to make way for tourist services. Before there were stores of big clothing brands, but now there are ice cream shops, crepe shops, tacos. Still food shops, but only for tourists."

According to the European statistical agency Eurostat, the number of short-term rentals in Europe increased by 7.8% in the second quarter compared to the same period last year, accounting for 23% of the total accommodation available. This has contributed to the shortage of affordable housing supply in popular tourist destinations in France, Spain and Italy.

Many countries tighten control over short-term rental properties.

Faced with this situation, many countries are tightening control over short-term rental housing to ensure the balance of the housing market. Many strict measures have been introduced.

In Europe, many cities such as Paris, Barcelona, Vienna have limited the number of short-term rentals per year (from 90 to 120 days), requiring registration, licensing and strict management of rental activities.

Historic cities such as Florence, Venice, Lisbon, and Athens have imposed bans or strict limits on short-term rentals to protect residents and ease housing market pressures. The EU is expected to introduce a common law from May 2026 to regulate the market, focusing on protecting long-term residency rights and maintaining housing balance.

In North America, many cities allow landlords to rent out their primary residence for short-term rentals, require a license, and limit the number of properties that can be rented out for short-term rentals. Asian countries such as Japan and South Korea have also tightened short-term rental laws to protect the housing market and limit negative social impacts.

Impact of strict control of short-term rental housing

However, controlling short-term rentals too tightly can also cause unwanted effects, because these services contribute significantly to the economy.

A study by Oxford Economics in 2023 found that short-term rentals generate a total economic benefit of €149 billion and support 2.1 million jobs in the EU. The imposition of restrictions would have a major impact, reducing economic revenues while making travel more expensive.

Meanwhile, the impact of curbing house price growth has been less dramatic. According to Oxford Economics, short-term rentals account for only a small fraction of the total housing stock in major European cities, and even if all of them were rented out long-term, house prices would fall by less than 0.7%.

The latest example is in Canada, where the city of Vancouver, which has strict regulations on short-term rentals, could face a total shortage of about 70,000 tourist accommodation spaces and a 200% increase in hotel prices during the 2026 World Cup. This comes with a loss of 45 million Canadian dollars in revenue.

Balanced solutions to support the housing market

Such impacts pose a major challenge for authorities in countries in stabilizing the housing market, but at the same time not affecting the development of tourism and services. This requires a more balanced and sustainable approach.

In Australia, the Western Australian government has required all short-term rentals to be registered, allowing for better monitoring and regulation of the market. It is also offering a financial incentive of A$10,000 to landlords who agree to convert their short-term rentals to long-term rentals for at least 12 months.

"I think local communities can look at their own areas to assess whether the number of short-term rentals is too high and lobby local authorities to change that," said John Carey, Housing Minister, Western Australia. "Our goal is to get more landlords moving to long-term rentals."

Meanwhile, the EU is also working to address the shortage of long-term housing for its citizens. Alongside restrictions on short-term rentals, affordable housing plans and housing initiatives will be implemented.

Ms. Ursula Von Der Leyen - President of the European Commission (EC) emphasized: "We need a comprehensive reform to make housing more accessible, sustainable and of better quality. We need to amend the regulations on state subsidies to increase housing support, simplify procedures for building new houses and student dormitories, as well as new initiatives to address the problem of short-term rentals."

European countries have also previously adopted a number of market support measures. In 2023, France amended its law to sharply increase the tax on vacant homes, to 17% in the first year and 34% in subsequent years, in order to force homeowners to put their homes back on the market early, lower their selling prices or reduce long-term rental fees.

Meanwhile, in Germany, the government has agreed with the states to spend 3.5 billion euros this year to develop social housing and student dormitories to ensure housing needs for young people.

Source: https://vtv.vn/cho-thue-nha-ngan-han-lam-nong-thi-truong-nha-o-100251008104245882.htm