Locals iced out of Cape Town rental market

Since short-term rental company Airbnb entered South Africa in 2015, the average rental price in Cape Town has risen from R6,696 to R11,285, likely inflated by “the Airbnb effect.”

This is well above the national average of R9,132 and makes the Western Cape the most expensive province to rent in, according to data collated by PayProp.

In its latest analysis for the first quarter of the 2025/2026 financial year, Payprop analysts said cracks may be starting to show in residents’ ability to afford rent, with a growing number of tenants, 13.7%, in debt.

On the other hand, Airbnb listings in Cape Town have spiked, almost doubling from 2022 to 2025.

According to Inside Airbnb, South Africa has 25,882 active listings on Airbnb: more than cities such as San Francisco, Amsterdam, Athens, Berlin, Sydney, Tokyo, and Barcelona. 

“Residents argue that the popularity of Airbnb has reduced the availability of long-term rental properties, driving up rental prices to levels that are unaffordable for locals,” said the Coastal Property Group. 

The property group added that this situation has sparked calls for regulation, with advocates pushing for measures that balance the needs of residents, property owners, and the tourism industry.

Responding to this, the South African Department of Tourism signed an agreement with Airbnb in August 2023 to implement new regulations that control the impact of short-term rentals.

The Memorandum of Understanding (MoU) included a threshold on the number of days a property can be rented annually and a requirement for hosts to obtain licenses and meet health and safety requirements.

Two years later, however, these measures have still not been implemented. Airbnb itself complained that the government hadn’t implemented a national registration system, as per the MoU, in October 2024. 

Cape Chairperson of the Federated Hospitality Association of Southern Africa (FEDHASA), Lee-Anne Singer, told Newsday that the delayed legislation likely reflects the complexity of the issue.

The department must align multiple spheres of government with the need for broad stakeholder consultation, complicating the public consultation process.

Singer said that without clear legislation, however, short-term rentals risk inflating property prices and placing additional pressure on local housing.

High demand, low availability and aggressive year-on-year increases

The Economic Policy Institute, a US-based think tank, said the “Airbnb effect” and over-tourism facilitated by platforms like Airbnb negatively impacted house prices and communities. 

According to Forbes, a 1% increase in Airbnb listings leads to a 0.018% increase in rental prices and a 0.026% increase in house prices. 

Some city officials, such as Barcelona’s mayor Jaume Collboni, have announced a ban on short-term rentals from 2028 and plans to convert 10,000 properties back into long-term housing. 

Athens has banned new short-term rental listings and Prague has capped the number of days a property can be rented out in a year.

Airbnb has denied that it has driven up the cost of Cape Town housing, arguing that its dedicated listings make up 0.9% of the city’s 818,000 housing units in 2024. 

Data analyst Melville Du Plessis has found that when analysing recent data on the housing market, “the numbers are wild.”

Du Plessis said that in 2025, a one-bedroom rental in Cape Town’s CBD averages over R20 000 a month, with studio apartments tipping past R15 000. 

The average size of these apartments is 55 to 57 square metres. In Sea Point, a studio apartment costs an average of almost R19,000 a month.

The average South African salary, according to the latest Labour Force Survey by StatsSA, is R28,289. This means that the average South African would spend over 70% of their salary on rent to live in these apartments.

For context, Property24 says that the rule of thumb for affordability is to spend no more than 30% of one’s income on rent.

“Those aren’t outliers anymore,” said Melville. “Between high demand, low availability, and aggressive year-on-year increases, the rental market’s become exceptionally tough to navigate.”

South Africans turn away from Cape Town

As a result of high costs, South Africans have shown signs of turning away from the Western Cape housing market. 

According to Property24, recent housing trends indicate that a growing number of South Africans are returning to Gauteng after a long-running trend of semigration to the Cape. 

Research from Lightstone found that this trend is driven by long school waiting lists, municipal backlogs, and rising property costs in the Western Cape.

“There was an initial surge in movement [to the Western Cape] post-2020, largely driven by the desire for lifestyle change, remote work flexibility, and dissatisfaction with service delivery in some metros,” said Antonie Goosen, principal and founder of Meridian Realty. 

“That momentum is now tapering, particularly as property prices in the Western Cape have climbed.”

Singer emphasised, however, that the tourism department’s legislation will need to strike a careful balance between safeguarding affordability and sustaining investment that underpins the tourism economy. 

“Short-term rentals – alongside the formal accommodation sector like hotels and guesthouses – play an important role in creating jobs and attracting capital,” she said.

According to Inside Airbnb, the average Airbnb host earns R84,590 per listing, per year, and over 60% of Cape Town Airbnb hosts own multiple listings.

Airbnb commissioned a study in October 2024 to illustrate the positive impact that short-term rentals have on the local economy.

The platform said that Airbnb hosted more than 700,000 guests in Cape Town in 2023, and that Airbnb guests contribute about R14,4 billion to the economy annually and support 42,000 jobs.

Airbnb reported that listings “did not increase significantly” between 2022 and 2024 and that if dedicated Airbnb rentals were converted back into long-term housing, it would lead to an average reduction in rent of only R69 per month.

With these benefits in mind, Singer is confident that “With the right measures, Cape Town can protect residents, provide certainty to investors and secure long-term job creation across all accommodation sectors.”