Exposing Airbnb’s Impact on Global Cities: Cap and Trade System Proposed to Curb Runaway Growth
Grounded Community Land Trust Advocacy
Recent research from Australian-based Grounded Community Land Trust Advocacy has revealed that Airbnb is exacerbating housing shortages and driving rental prices beyond the reach of many residents in major global cities.
Karl Fitzgerald, Managing Director of Grounded Community Land Trust Advocacy, highlighted the disparity: “Airbnb investor returns far exceed those of traditional property investors—by a shocking 118%. This trend has been observed across global cities such as Berlin, Barcelona, Vancouver, London, Los Angeles, Paris, and Sydney.”
The study found that in highly impacted cities like Berlin and Barcelona, gross short-term rental (STR) earnings were 201% and 171% higher, respectively, than long-term rental (LTR) incomes. “As Airbnb profits soar, local residents struggle to find stable and affordable housing, which undermines the social fabric of communities and perpetuates inequality,” Fitzgerald stated.
The report also revealed that active Airbnb listings are growing at an average rate of 5.6% per annum, driven by a modest 3% income growth across 337,500 STRs. This has forced many workers to endure long commutes while paying exorbitant rents.
The situation in Australia was examined in detail in the report Airbnb: From a Housing Problem to Solution, which found that STR earnings were 81% higher than those of traditional landlords, leading to 74% of new housing supply being directed towards short-term rentals. “Who would have thought a new investor cohort would make a traditional landlord look like an angel?” Fitzgerald remarked.
To address this crisis and promote affordable housing, Grounded Community Land Trust Advocacy is proposing a transformative cap and trade system. This system would curb the growth of STRs while channeling Airbnb profits towards Community Land Trusts (CLTs). The cap and trade model would work by capping the number of Airbnbs and issuing licenses, which would be gradually reduced over time. This reduction would pressure the 48% of listed Airbnbs that are not regularly rented out, pushing them back into the traditional housing market and easing the housing supply strain.
“The potential revenue is significant,” Fitzgerald noted. “For instance, Paris could generate $140 million in its first year, still leaving a net $920 million for Airbnb owners. Alternatively, more cities may follow the lead of New York and Barcelona, which have moved to cancel Airbnb operations.”
CLTs are recommended as they are perpetually affordable housing models that prioritise local residents and lock in affordability over time. “The growing presence of CLTs offers a sanctuary of affordability amidst speculative housing pressures,” Fitzgerald added.
The data underscores the urgent need for capping and funding alternatives like CLTs to build resilience against these rapid changes. In Berlin, Airbnb owners saw a 15% increase in earnings, leading to a 17% growth in active listings. Similarly, Barcelona experienced a 15% income growth, contributing to a 10% rise in active listings over the past three years. Even in London, where STR incomes were lower than LTR, listings surged by 22% in the same period.
“Airbnb is enforcing rapid change that squeezes communities sideways as short-term profits reign supreme. CLTs can add resilience to local communities, ensuring their long-term survival,” Fitzgerald concluded.
Sources: AirDNA, Global Property Price Index, Zumper. See Appendix in the attached document.
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