Banning Airbnb Won’t Cure Europe’s Housing Shortage — But Could Airbnb In Fact Be the Cure

By Robert McGarvey

Politicians, in Europe as well as America, love to heap blame on “out of towners” – i.e., people “not like us” – for many of the problems that are of their own making and Europe’s affordable housing shortage continually fuels blame thrown at Airbnb and other short term vacation rental providers because, well, they are convenient scapegoats for pols in Barcelona, Lisbon, Florence and more.  

Fact: Europe’s housing is a mess. But Airbnb et al are not the cause.

For instance: Ten years after Barcelona imposed restrictions on short term rentals – i.e., Airbnb – the results are what? Says Airbnb: “Official data shows that while short-term rentals numbers have fallen, challenges related to housing and overtourism are worse than ever. “

The problem in Barcelona isn’t Airbnb, it’s that sufficient new housing isn’t getting built.  Says Airbnb: “In the last decade, Spain has built fewer homes than at any point since 1970. While levels of construction have remained stagnant, demand for new homes has increased. In 2023, data from the Ministry of Housing3 shows that the creation of new households in Spain outpaced the number of new homes built by three to one.”

Barcelona isn’t alone in regard to a housing shortage, particularly in regard to affordable housing.  It’s a global issue. In Phoenix AZ research out of Arizona State University pinpoints how dire the situation is: “Arizona is short 270,000 housing units, and there are only 26 rentals available for every 100 extremely low-income households.”

In Ireland a full third of residents are thinking about moving abroad because of the shortage of housing and the acute shortage of affordable housing. Alas, most of Europe has similar shortage issues, so geographic cures won’t solve the housing riddle for many.

Nor would bans on Airbnb, tempting as many pols find that idea.

Understand, I do believe short term rentals may aggravate housing shortages in specific, trendy neighborhoods. In Madrid’s trendy Lavapies neighborhood an investor can buy a small, rundown apartment – maybe 300 sq ft – for under $150,000.  Put perhaps $30,000 into a full renovation and that unit could fetch $2000/month via Airbnb versus the $300/month the current tenant pays.  And that would mean another low income family loses its housing.

Such is happening, in Madrid, Barcelona, Lisbon, and more,

But the numbers say there just aren’t enough Airbnb units on the market to cause the significant housing shortages that are found across Europe and in most US big cities too.

Which is where a stunning idea from Porto, Portugal mayor Rui Moreira comes in.  The headline delivers the punch: “Meet the mayor who sees Airbnb as an agent for good.”

Yes, Porto has some questionable ideas, witness its recent 50% bump of its nightly tourist tax from 2 Euros nightly to three. In 2023 5.5 million overnight stays were recorded, so this means an extra 5.5 million Euros will flow into the town coffers but what it won’t do is discourage tourism. It will simply give pols more pork to roll in.

But this Moreira idea about Airbnb is definitionally out of the box. Says Mr Mayor: “It’s clear that there are certain zones in which more short-term rentals can’t be authorised, and there are other zones in which they can, and it’s good,” he said.

“When we think for example of Porto, in Campanha, which is an area we want to renovate, we know that short-term rentals have a very interesting impact because they accelerate renovation. And it’s better to have a short-term rental in a house that’s been refurbished than to have a ruin in that place.”

This is a brilliant idea,  Cities should use Airbnb strategically to gentrify rundown and neglected areas.  By all means, use zoning to keep Airbnb out of neighborhoods that are doing fine – just as many city neighborhoods specifically bar hotels from their boundaries.

But if a neighborhood has a good location yet needs help, an Airbnb investor just might be tempted to take a flyer and if all works out flip the unit in five or ten years to a buyer who just might want to occupy the home in a neighborhood that went from undesirable to desirable in part because of an Airbnb transition.

Could it in fact work?  I don’t know but I do know it’s not as dumb an idea as an outright ban on Airbnbs as cities like Barcelona and Valencia natter about.