Tourism, the boom in low-cost flights is driving up rents: in Italy, increases of up to €130

In recent years, the surge in low-cost air travel has sparked a noticeable shift in housing markets across several European countries, particularly in Italy. According to a study commissioned by T&E, a group focused on reducing transport emissions, the increased volume of tourists arriving via budget airlines has led to a rise in rental prices. The research, conducted by the New Economics Foundation (Nef), highlights that this trend could have significant economic implications over the coming years. In Italy, average annual rent is projected to increase by up to 130 euros due to the growing influx of tourists, who often arrive by air and contribute to higher demand for accommodation.

The study identifies five major economies within Europe—Italy, Greece, Ireland, Spain, and Portugal—as being most affected by this phenomenon. These nations rely heavily on tourism, which has seen a notable boost thanks to the expansion of low-cost carriers. For instance, the Irish market is anticipated to experience the highest absolute increase in rents, with an estimated annual rise of 250 euros. However, relative increases are more pronounced in other destinations such as Greece, Portugal, and Spain, where rent hikes are predicted to range between 130 and 220 euros annually. This pattern reflects the broader impact of increased tourist activity driven primarily by air travel, especially among international visitors.

The connection between rising tourism and housing costs is further underscored by the study's findings regarding specific regions facing pressure from overtourism. Areas like the Balearic Islands, Crete, and Madeira, known for their popularity among travelers, have experienced high levels of foreign arrivals per capita. A majority of these visitors use air travel, contributing to both environmental concerns and social challenges related to housing availability. The report notes that aviation accounts for approximately 52% of direct emissions from the global tourism industry, highlighting its role in exacerbating climate change while also influencing local economies.

Governments across Europe continue to prioritize growth in sectors linked to air mobility and tourism. This includes substantial investments in airport infrastructure, such as Spain’s allocation of 12.8 billion euros for expanding airports in Barcelona and Madrid. Similarly, Athens is currently working on a project worth 1.3 billion euros to increase passenger capacity by 25%, while Lisbon is undergoing terminal expansions. In Italy, discussions are ongoing about expanding Rome’s Fiumicino Airport, indicating a continued commitment to supporting the tourism sector through improved transportation networks.

However, the analysis also warns of potential negative consequences associated with this trend. As property values climb, there is a risk of reduced investment in other areas of the economy. Between 2019 and 2031, businesses in Greece, Portugal, Spain, and Italy may face declines in investment, with Italy and Spain experiencing the largest losses, amounting to 1.1 billion and 1 billion euros respectively. The study suggests that investors might redirect funds toward real estate rather than into productive and innovative industries such as electric vehicles, rail systems, or information technology. This shift could hinder long-term economic diversification and sustainability efforts.

In addition to these macroeconomic concerns, local communities are grappling with the immediate effects of rising rents. In cities like Turin, where over 70,000 properties remain vacant, families are waiting for affordable housing, and rental prices have climbed by nearly 9.4%. Such developments highlight the complex interplay between tourism-driven economic growth and the strain placed on residential markets, underscoring the need for balanced policies that address both the benefits and drawbacks of increased tourist activity.