Why regulating Airbnb won’t fix South Africa’s housing crisis

• Short-term rentals make up a tiny share of housing and do not drive rental inflation.
• Tourism spending from Airbnb boosts jobs, GDP and local business ecosystems.
• The real problem is housing supply, stalled by red tape and slow development approvals.

The big regulation issue

‍Calls to regulate Airbnb are growing louder as rental prices rise and housing shortages intensify in major South African cities, especially Cape Town. While short-term letting is often portrayed as a convenient villain, the evidence suggests it is being blamed for a crisis it did not create.

‍According to Renier Kriek, Managing Director of Sentinel Homes, tighter Airbnb regulation will neither free up meaningful housing stock nor make rentals more affordable.

Instead, it risks damaging tourism, jobs and economic growth, while distracting policymakers from the real issue: a chronic shortage of new housing supply.

The real impact of short-term rentals

‍Using Cape Town as a case study, a 2024 report on Airbnb’s impact on the city shows that from 2020 to 2024, the number of listings resulting in stays grew only marginally. More importantly, dedicated short-term rental properties account for just 0.9% of the city’s 818,000 formal homes.

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“Partial listings, such as spare rooms or garden cottages, are shared with existing residents and therefore do not reduce housing availability,” explains Kriek. “They are simply not the drivers of unaffordability that critics suggest.”

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A significant economic contributor

‍In 2023 alone, Airbnb guests in Cape Town generated an estimated R14.4 billion in GDP, supported 49,000 jobs and contributed around R7 billion in wages. This spending ripples through local retail, transport, services and hospitality, strengthening small businesses and expanding the tax base.

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“These visitors would stay somewhere regardless,” says Kriek. “If not in short-term rentals, then in hotels and guesthouses, which also occupy land that could otherwise be residential. The difference is that Airbnb spreads the economic benefit far wider.”

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Policy risk and unintended consequences

‍While the City of Cape Town is considering registration requirements for short-term rentals – a move supported by Airbnb, proposals to impose commercial property rates on hosts could raise costs and reduce tourism demand.

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“Driving up costs for hosts will ultimately make Cape Town less competitive and hurt the most vulnerable through job losses and reduced economic activity,” warns Kriek.

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The real culprit: a supply deficit

‍Cape Town’s mayor, Geordin Hill-Lewis, recently pointed out that around 100,000 people have semigrated to the city over the past three years, pushing the metro’s population towards 5.1 million in 2025. This surge has collided with a slow and constrained development pipeline.

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“The problem is not Airbnb, it’s a housing supply shortage, especially for working-class households,” says Kriek. “And the only real solution to a supply problem is more supply.”

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Hill-Lewis has acknowledged that while the City is accelerating land release for micro-developers, large-scale affordable housing delivery depends heavily on national government funding and faster planning approvals.

Kriek adds that in many cases it takes between seven and eighteen years for new developments to move from land identification to occupation, largely due to regulatory delays.

Way forward

‍Regulating Airbnb may be politically appealing, but it targets a minor symptom rather than the structural cause of South Africa’s housing crisis. Short-term rentals account for a fraction of housing stock and play a meaningful role in supporting tourism, employment and economic growth.

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“The focus should be on unlocking land, cutting red tape and accelerating housing development,” concludes Kriek. “If the real concern is affordability and protecting the vulnerable, then restricting a productive economic activity like Airbnb is the wrong place to start.”

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