Derek Martin
09 Jul 2025
The short-term rental market in South Africa, dominated by platforms like Airbnb, has experienced significant growth over the past decade, transforming the tourism landscape and contributing billions to the economy. However, recent regulatory changes proposed by the South African government, alongside Airbnb’s internal policy shifts, are poised to reshape this dynamic sector. This article explores the potential impacts of these changes on South Africa’s tourism economy, housing market, and local communities, with a particular focus on Cape Town, a global Airbnb hotspot.
Airbnb has become a cornerstone of South Africa’s tourism industry, supporting economic growth and job creation. In 2022, Airbnb contributed R23.5 billion to the South African economy and supported nearly 50,000 jobs, a 115% increase from pre-COVID levels. In 2023, Cape Town alone welcomed 700,000 Airbnb guests, generating R14.4 billion in GDP and supporting 42,000 jobs. The platform’s appeal lies in its ability to offer unique, affordable accommodations, enabling hosts to earn supplemental income while catering to diverse traveler preferences. However, this rapid expansion has raised concerns about housing affordability, regulatory oversight, and competition with traditional hospitality sectors.
RECENT CHANGES IN THE AIRBNB ECOSYSTEM
1. Proposed Government Regulations
The South African Department of Tourism is finalizing a policy framework to regulate short-term rentals, aiming to balance tourism growth with housing needs. Key proposals include:
National Host Registration System: Airbnb has advocated for a national registration system to enhance transparency and provide data for evidence-based regulation. This system would allow authorities to monitor hosting activities and implement targeted rules where necessary.
Thresholds on Rental Days: The framework may empower the Minister of Tourism to limit the number of days a property can be rented annually, potentially restricting short-term rentals to preserve long-term housing availability.
Licensing and Compliance Costs: New regulations may require hosts to obtain licenses, adhere to zoning laws, and meet safety and health standards, increasing operational costs.
These measures respond to concerns about housing affordability, particularly in Cape Town, where Airbnb listings have surged by 190% since 2022, with over 23,000 active listings. Critics argue that short-term rentals inflate rental prices, making it difficult for locals to compete.
2. Airbnb’s Internal Policy Updates
In March 2024, Airbnb implemented a global initiative to remove 100,000 low-quality listings, prioritizing high-quality, reliable accommodations. This move, part of the company’s “Spring Product Update,” involves stricter verification processes, including photo and video authentication, and an enhanced “Guest Favorites” system to highlight top-performing listings. In South Africa, this could impact hosts who fail to meet elevated standards, potentially reducing the number of active listings.
IMPACTS ON THE SOUTH AFRICAN MARKET
1. Tourism Economy
The proposed regulations and Airbnb’s quality crackdown could have mixed effects on South Africa’s tourism sector:
Positive Impacts:
Enhanced Trust and Quality: Airbnb’s focus on high-quality listings may improve guest experiences, reinforcing South Africa’s reputation as a premier travel destination. This could attract more international visitors, who account for 44.74% of Cape Town’s Airbnb guests.
Sustainable Tourism: A national registration system could promote sustainable tourism by ensuring compliance with safety and tax regulations, aligning with global trends.
Economic Resilience: By formalizing the short-term rental market, regulations could integrate it into the mainstream tourism economy, potentially stabilizing income for hosts and supporting local businesses.
Negative Impacts:
Reduced Host Income: Limits on rental days and increased compliance costs could reduce hosts’ earnings. In Cape Town, a typical host earns R74,000 annually from 38 nights of bookings, and restrictions could jeopardize this income, particularly for the 49% of hosts who rely on it to afford their homes.
Market Share Loss: Some hosts report a decline in Airbnb bookings in Cape Town, with competitors like Booking.com gaining traction. Stricter regulations could push hosts to alternative platforms, potentially eroding Airbnb’s dominance.
Investment Uncertainty: Investors may hesitate to enter the short-term rental market due to regulatory uncertainty, potentially slowing the growth of tourism-related real estate.
2. Housing Market
The proliferation of Airbnb listings has been linked to housing affordability challenges, particularly in Cape Town, where dedicated listings account for 0.9% of formal housing units. The government’s regulatory push aims to mitigate these issues:
Potential Relief for Long-Term Rentals: Limiting short-term rental days could free up properties for long-term tenants, easing pressure on rental prices. However, Airbnb’s research suggests “little to no correlation” between its listings and rising rents, pointing to broader factors like apartheid’s spatial legacy and internal migration.
Challenges for Hosts: Many hosts, especially small-scale operators, rely on Airbnb to supplement income amid rising living costs. Formal registration and compliance costs could strain their finances, potentially forcing some to exit the market.
Gentrification Concerns: The “Airbnb’fication” of Cape Town’s city center has been criticized for deepening inequality and displacing residents. Regulations could curb this trend, but enforcement challenges may persist in high-demand areas like the Atlantic Seaboard.
3. Local Communities
The changes will also affect local communities, particularly in tourism-heavy regions:
Economic Benefits: Airbnb guests often spend at local businesses, creating a ripple effect that supports small enterprises. In 2023, Cape Town hosts earned R2.5 billion, much of which was reinvested locally. Regulations that preserve hosting opportunities could sustain these benefits.
Social Tensions: The influx of short-term rentals has sparked tensions in residential areas, with residents citing noise, safety, and community disruption. A registration system could address these concerns by enabling better oversight.
Cultural Impacts: By promoting authentic, community-based tourism, Airbnb has diversified travel experiences. However, over-reliance on short-term rentals risks turning neighborhoods into “tourist zones,” undermining local culture.
CASE STUDY: CAPE TOWN'S AIRBNB MARKET
Cape Town exemplifies both the opportunities and challenges of Airbnb’s growth. With 19,114 active listings as of March 2025, the city boasts a 71% median occupancy rate and an average daily rate of ZAR1,663. The Atlantic Seaboard, in particular, offers yields of 10–15% annually, far surpassing the 4–7% of long-term rentals. However, the city’s housing crisis, exacerbated by internal migration and a 190% increase in Airbnb listings since 2022, has fueled calls for regulation. The proposed thresholds and registration system could stabilize the market but risk dampening investment and host income if overly restrictive.
Stakeholder Perspectives
Hosts: Many hosts, particularly small-scale operators, fear that regulations will increase costs and limit income. A 2023 Airbnb Community post highlighted concerns about formal registration costs and competition from larger tourism players.
Government: Minister Patricia de Lille emphasizes the need for data-driven regulation to balance tourism and housing needs. The Department of Tourism’s collaboration with Airbnb signals a willingness to work with stakeholders.
Traditional Hospitality: The Federated Hospitality Association of South Africa (FEDHASA), once a vocal critic, now supports a balanced approach, recognizing short-term rentals as integral to tourism.
Residents: Locals in Cape Town express frustration over rising rents and community disruption, urging stricter controls.
Future Outlook
The impact of these changes will depend on the final regulatory framework and its enforcement. A balanced approach - combining a national registration system, reasonable thresholds, and support for small-scale hosts - could enhance transparency and sustainability while preserving economic benefits. However, overly stringent rules risk stifling innovation and pushing hosts to unregulated platforms. Airbnb’s quality initiative may strengthen its brand but could exclude marginal hosts, particularly in rural areas with fewer resources.
Investors should remain cautious, focusing on high-demand areas like the Atlantic Seaboard while preparing for compliance costs. Hosts can adapt by prioritising quality, leveraging Airbnb’s verification tools, and diversifying income through alternative platforms. For policymakers, collaboration with Airbnb and local stakeholders will be crucial to crafting evidence-based regulations that address housing concerns without undermining tourism.
The recent changes to Airbnb’s operations and South Africa’s regulatory landscape mark a pivotal moment for the short-term rental market. While these measures aim to address housing affordability and ensure sustainable tourism, they pose challenges for hosts and investors. By fostering transparency and quality, South Africa can harness Airbnb’s economic potential while mitigating its social impacts, ensuring that the tourism boom benefits both visitors and locals.