EDITORIAL | Digital letting not the main culprit in Cape Town’s unaffordable housing market

Cape Town, like other international cities such as Barcelona, Paris and New York, is having to address the effect of Airbnb and other online short-term rental platforms on the housing market.

Barcelona is planning to ban short-term rentals outright from November 2028, and New York has imposed extremely strict rules on them.

Airbnb has added to the shortage of accommodation in Cape Town. According to Inside Airbnb, a project that collects data on its impact on major international cities, Cape Town has 27,072 listings, 84.5% (22,885) of which are entire homes or apartments.

But it is only one of the factors contributing to the yawning imbalance between supply and demand in the city, which has led to sharply higher rentals, especially in the CBD, which have become unaffordable for many. The steep rise in prices in the overheated property market has also made accommodation increasingly unaffordable for the youth and first-time homebuyers.

Adding to the contribution of Airbnb to this situation are semimigration from other provinces, demand by foreign buyers, the absence of sufficient densification in the city centre and the lack of supply of affordable housing.

The city has responded to the multiplication of Airbnb establishments by imposing commercial property rates when properties are used for commercial accommodation, predominantly short-term letting, for more than 50% of the total annual number of room nights available for short-term letting. This is to level the playing field with businesses such as hotels.

Data provided by Inside Airbnb shows that 62.2% of the city’s hosts had multiple listings, suggesting that they were running a business. The top three had 215, 177 and 136 listings, respectively.

The South African Short Term Rental Association says the rates adjustment will have a “massive” effect on the sector, estimates that it will pay R500m more a year in rates and expects that 10%-20% of businesses will have to close as a result.

The rates increase is only aimed at short-term rental businesses, not at people supplementing their income by renting out some of their primary place of residence for some of the time.

This month the city also released a draft short-term letting bylaw for public comment, which aims to improve the identification of commercially defined properties by requiring the registration of all those listed on any booking platform. A city-issued registration number will have to be displayed on all listings.

The draft by-law also provides for direct information-sharing from online booking platforms, owners and operators. The aim is to improve compliance with the city’s rates policy.

Changes to a property’s rating category will be effective from July 1 2027, based on data from the proposed registration system.

Another important factor highlighted by Cape Town mayor Geordin Hill-Lewis ― who is vehemently opposed to an outright ban of short-term letting platforms ― is that the proliferation of Airbnb and other digital accommodation platforms is stifling hotel investment and job creation in the city.