Australia’s NSW South Coast Is Being Devoured by Overtourism: Locals Struggling as Kiama Faces Housing Crisis and Rising Costs

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The NSW South Coast, like many other popular global destinations such as Amsterdam, Rome, Barcelona, Santorini, Bali, Dubrovnik, Kyoto, and Byron Bay, is facing the challenges of overtourism. While the area is loved for its stunning beaches and picturesque landscapes, the influx of visitors, particularly during the holiday season, has brought significant negative consequences for both the local environment and residents.

Kiama: A Town Overwhelmed by Mass Tourism

Kiama, a charming town with a permanent population of just 12,000 people, sees up to 1.4 million visitors during the holiday season. This massive influx of tourists has created a paradox where the very attractions that bring people to the area—its beautiful beaches—are simultaneously being damaged. For every pristine beach, there is another one strewn with discarded plastics, food wrappers, and other waste. The rapid growth of tourism on the South Coast is slowly consuming the diversity it once celebrated.

While the area has become a hot spot for both local and international tourists, the benefits of tourism are not reaching the community as intended. The wave of visitors causes overcrowding, pushes up housing prices, and increases the cost of living, making it harder for local residents—especially the younger population—to afford to live in their own town. The cost of rent and basic goods such as food has skyrocketed, and many poorer residents are forced out of the area due to the gentrification fueled by mass tourism.

Tourism Development: More of the Same

The Kiama council is actively encouraging more visitors from Sydney and other parts of the state, promoting a strategy focused on growth rather than sustainability. In partnership with DTM Tourism, the council is working on a Kiama Visitor Economy Strategy, but the plan seems to prioritize more visitors and more spending over environmental concerns or quality of life for residents. The strategy appears to center on a simple mantra: “More, more, more.”

Tourism Statistics: A Financial Success But a Local Struggle

Recent reports show that tourism is a financial boon for Kiama and surrounding areas. In 2025, visitors stayed a total of 1.8 million nights, representing a 29% increase from the previous year. This surge in visitors brought an additional $14 million in revenue, with total visitor spending reaching $362 million. While these figures seem positive from an economic perspective, locals have yet to see tangible benefits. For many, the arrival of wealthy tourists, often driving luxury vehicles like Range Rovers, feels disconnected from their everyday lives. The town has become a magnet for tourists, but the booming industry isn’t providing the necessary support for long-term residents.

In early October, the situation reached a peak when traffic backed up for seven kilometers along Highway One, as cars struggled to enter Kiama. Despite these challenges, local businesses, particularly in the retail and hospitality sectors, remain unable to meet the demand or see much improvement in sales. This disconnect between the increased number of visitors and the lack of local economic benefits has led to growing frustration among residents.

Housing Crisis and Gentrification: Developers Eyeing the South Coast

In addition to the influx of tourists, developers have set their sights on the towns of Kiama, Minnamurra, Gerringong, Jamberoo, and Gerroa. These once green farmlands are now being eyed for large-scale developments that include luxury homes and short-term rentals such as those listed on Airbnb. These cookie-cutter properties, many of which are designed for wealthy visitors, contribute to the escalating housing crisis. The expansion of these developments has left local councils with little control over planning decisions, as some councillors are perceived to be more aligned with property developers than with community needs.

Rising Costs for Locals: Impact on Daily Life

In Kiama, the Woolworths supermarket has become one of the most expensive stores in New South Wales (NSW), second only to Byron Bay. The rise in property values has translated into higher prices for residents, further exacerbating the struggle for locals, particularly the elderly population, many of whom live on age pensions. These seniors are already feeling the pinch of inflated costs, which further marginalizes them in their own community.

Local media outlets, including the Illawarra Mercury, have been hesitant to address the broader issues surrounding tourism’s impact on the community. The focus has primarily been on showcasing the beauty of the South Coast and the opportunities for visitors to capture the essence of the region through social media. Influencers and travel websites, such as Australian Traveller, Urban List, and Homes to Love, promote expensive Airbnb stays that cater to the wealthyand those aspiring to join the ranks of the affluent. These platforms rarely address the affordable housing crisis or the challenges faced by local residents.

The Impact of Short-Term Rentals and Equity Concerns

One of the most contentious issues surrounding the tourism boom is the rise of short-term rentals. As wealthier visitors snap up properties for short-term stays, local families are often left struggling to find rental options. The growing Airbnb market is exacerbating the housing crisis, and while property owners have the right to rent out their homes, the government must step in to ensure equity in the housing market. Many believe that the government should impose higher taxes on short-term rental owners to mitigate the negative effects on the local community and ensure that long-term residents are not priced out of the area.

Possible Solutions: Protecting Local Communities from Overtourism

To address the challenges faced by communities like Kiama, the NSW government must consider implementing regulations that limit the impact of tourism on local residents. One proposed solution is to halt tourist marketing and advertising, except for promoting major annual events. This would reduce the pressure on local infrastructure and prevent further gentrification caused by tourism. Additionally, Airbnb rentals should be capped at a maximum number of 90 stays per year, ensuring that these properties are available for long-term rentals and that local families can access affordable housing options.

For property owners who lease out their second homes as long-term rentals, they could be incentivized with rate rebatesand tax concessions. Furthermore, tourists who stay more than one night should be required to pay a fee to contribute toward the maintenance of beaches, parks, and roads that are affected by the heavy tourist traffic.

A Call for Change: Shifting the Focus to Sustainability

The statement by former Labor Prime Minister Ben Chifley about striving for a “light on the hill” now holds a new meaning for the South Coast. Instead of focusing on the interests of wealthy property owners, the government must shift its focus toward sustainability and ensuring that locals have access to affordable housing and services. The balance between tourism and local welfare must be addressed to preserve the charm and integrity of the NSW South Coast for future generations.