Overtourism drives €342 annual rent hikes in southern Europe
A new study reveals that surging tourist arrivals, not construction costs, are directly inflating rents across southern Europe, creating a growing economic burden for local residents.
A new study by the New Economics Foundation has linked surging tourist arrivals directly to rising rents in southern Europe, with Greek residents facing the steepest annual increases. By combining Eurostat rent data with air passenger volumes and current rent prices, researchers found that tourism flows have added €342 a year to Greek rents since 2019. The findings shift the blame for housing affordability crises away from traditional economic drivers and onto the continent's dominant tourism sector.
Spain, Portugal and Italy have also experienced significant rent inflation tied to visitor numbers. Researchers estimate annual increases of €236 in Spain, €220 in Portugal and €202 in Italy over the same period. While these figures represent a substantial financial strain on local populations, the study notes that domestic market conditions have altered the severity of the impact.
Europe attracts more than half of all international tourist arrivals globally, a status that pumps millions of euros into the broader economy every year. However, the NEF data highlights a stark market distortion: the economic benefits of this influx are unevenly distributed, effectively pricing out the local workforce. For investors and policymakers, this presents a growing conflict between maximizing lucrative tourism revenues and maintaining a stable, accessible residential rental market.
The study specifically rules out construction costs as a primary driver of these rent hikes. While building prices have risen 45% across the EU over the past decade, Italy, Spain and Greece have experienced only minimal increases in recent years. If construction costs cannot explain the surges, the conversion of long-term residential properties into short-term tourist accommodations emerges as the primary market mechanism pushing up prices.
The housing pressure is not confined to the Mediterranean. Ireland is projected to see the largest absolute rent increase over the next five years, with an additional €251 per year expected. Current plans to expand Dublin Airport are likely to exacerbate this already strained market, pushing consumer housing costs even higher. Across all surveyed nations, the data suggests tourism volumes will continue to dictate residential rent trajectories for the foreseeable future.
