Spain Battles Surging Short-Term Rentals As Housing Prices Skyrocket And Local Communities Struggle To Cope With The Unprecedented Growth In Tourism, With Greece Facing Similar Challenges

Published on December 27, 2025

Spain is facing a growing housing crisis as short-term rentals continue to surge, outpacing the number of hotel beds and driving up property prices. This shift is creating significant challenges for local residents, who are finding it increasingly difficult to access affordable housing. Similar to Greece, which is experiencing its own struggles with the rapid expansion of vacation homes, Spain’s tourism boom is putting pressure on housing markets and sparking debates over the long-term impact of short-term rentals on local communities.

Greece is facing mounting pressure as the surge in tourism has led to significant changes in its housing and accommodation landscape, and British tourists are at the heart of the shift.

The country, traditionally a popular destination for sun-seekers, is grappling with the rise of short-term rental properties, which now exceed the number of hotel beds. New data from the Institute of the Greek Tourism Confederation (INSETE) reveals that in July 2025, a record 245,944 properties were listed on platforms like Airbnb. This equates to over one million available beds, vastly surpassing the 900,000 hotel beds across Greece. While this growth in holiday homes reflects a thriving tourism industry, it is creating a ripple effect that could negatively impact both locals and the traditional hospitality sector.

The rise of holiday rentals has led to growing concerns in Greek cities, particularly among locals. There is an increasing fear that these short-term lets are pushing up property prices and making it more difficult for Greeks to find affordable homes. As more properties are converted into vacation rentals, the availability of long-term housing shrinks, and rent prices soar. This shift is particularly evident in neighborhoods in Athens, such as Kolonaki, Koukaki, Pangrati, and Exarchia, where demand for vacation homes is highest.

In response to this housing crisis, the Greek government has implemented measures to limit the spread of short-term rentals. In 2024, a ban was placed on new tourist rental homes in certain areas of Athens, a measure that will continue into 2025, with no new licenses issued for properties in popular zones. Furthermore, all short-term rental homes must now be registered, and severe fines will be imposed on those found to be renting illegally. To encourage property owners to convert short-term rentals into long-term options, the government is offering tax incentives.

These developments in Greece mirror trends in other Mediterranean destinations, particularly Spain. In 2025, Spain’s hotel bed supply reached 1,226,428, according to CBRE, while the country boasts an impressive 351,000 holiday rental properties, providing a staggering 1.75 million beds. This growing trend of short-term rentals is also having an impact on traditional hotels. A report by Roomonitor highlights that in Spain, short-term rentals are growing ten times faster than the hotel industry, with bookings for holiday homes in the first part of 2024 increasing by 13.9%, compared to just 1.3% in hotels.

As more travelers turn to platforms like Airbnb, Spain’s tourism model is undergoing a profound transformation. In many cities, short-term rentals now offer more beds than hotels, leading to a major shift in how accommodation is structured. While this growth has undeniably been beneficial for property owners and the overall tourism economy, it has also created challenges, particularly in urban areas where housing demand is already high.

This surge in short-term rentals, while undoubtedly beneficial for tourism, raises important questions about sustainability. As more holiday homes flood the market, the focus has turned to balancing the needs of tourists with the wellbeing of local communities. Greece’s decision to suspend new licenses and regulate the growing short-term rental market is one of the ways the country is addressing these issues. Similarly, Spain is faced with the need to strike a balance between promoting tourism and ensuring that residents are not pushed out of their own neighborhoods.

In the first ten months of 2025, the number of inbound travelers to Greece grew by 4.4%, reaching 35,261 visitors, with British arrivals rising by 6.6%. The influx of tourists from the UK has played a key role in this tourism boom, further cementing Greece’s place as a top destination for British holidaymakers. However, as the short-term rental market continues to expand, Greece and other Mediterranean countries will need to find sustainable solutions to ensure that tourism benefits both visitors and residents alike.

The challenge ahead will be managing this growth in a way that supports the local economy without sacrificing the quality of life for residents. If successful, these efforts could serve as a model for other popular tourist destinations around the world, providing a blueprint for how to navigate the growing influence of short-term rentals while maintaining affordable housing for local communities.