The Airbnb Effect: How Short-Term Rentals Are Reshaping Greece’s Housing Market

Reading time: 12 minutes

Table of Contents

• Introduction: The Airbnb Phenomenon in Greece
• Historical Context: Greece’s Housing Before Airbnb
• Economic Impacts: Beyond Tourism Dollars
• The Emerging Housing Crisis
• Regional Case Studies: Athens, Santorini, and Thessaloniki
• Regulatory Responses and Policy Challenges
• Stakeholder Perspectives: Winners and Losers
• Balancing Tourism and Housing Needs
• Frequently Asked Questions

Introduction: The Airbnb Phenomenon in Greece

Picture this: a sun-drenched apartment in the heart of Athens that once housed a Greek family of four is now rotating through international tourists every few days, generating three times its former monthly rent. This isn’t an isolated scenario—it’s the new reality reshaping Greece’s urban and island landscapes.

Since Airbnb’s entry into the Greek market in 2009, the country has witnessed a profound transformation of its housing ecosystem. What began as a supplementary income stream for Greeks struggling through economic crisis has evolved into a sophisticated market that’s fundamentally altering housing availability, affordability, and community dynamics.

“Greece has become a textbook example of how short-term rental platforms can rapidly transform housing markets in tourism-dependent economies,” explains Dr. Eleni Papadimitriou, housing economist at the University of Athens. “The speed of this transition has left both policymakers and communities struggling to adapt.”

The numbers tell a compelling story: from just 747 listings in 2010 to over 129,000 active listings by 2023, Airbnb’s footprint in Greece has expanded by an astounding 17,000%. But behind these impressive growth figures lies a complex web of consequences for locals, property owners, investors, and the very fabric of Greek urban centers and island communities.

Historical Context: Greece’s Housing Before Airbnb

Pre-Crisis Housing Stability

Prior to the 2008 financial crisis, Greece’s housing market was characterized by high rates of homeownership—around 74% of Greeks owned their homes, well above the EU average. Housing was traditionally viewed as family investment rather than speculative asset. Multi-generational families often lived together or in close proximity, with properties passed down through inheritance.

Rental markets existed primarily to serve university students, young professionals, and those who couldn’t afford to purchase property. Rents were relatively stable and absorbed a manageable portion of average household income—typically under 30% for middle-class families.

Athens and Thessaloniki had established residential neighborhoods with strong community ties, while island communities maintained populations year-round despite seasonal tourism fluctuations. This stability created predictable housing patterns and preserved the character of historic neighborhoods.

The Economic Crisis Pivot Point

When the economic crisis hit in 2008, it devastated Greece’s housing stability. Property values plummeted by 45% between 2008 and 2017. Unemployment soared above 27%, forcing many families to seek new income sources or liquidate assets. The government imposed crushing property taxes (ENFIA) as part of austerity measures, making homeownership increasingly burdensome.

Enter Airbnb—perfectly timed to offer a financial lifeline. As Greek households struggled to meet mortgage payments and tax obligations, the platform provided a seemingly elegant solution: transform housing liability into tourism asset.

Maria Kostaropoulou, a 58-year-old homeowner in the Koukaki neighborhood near the Acropolis, recalls: “In 2013, my son lost his job, and we were barely making mortgage payments. Converting our ground floor apartment to Airbnb literally saved us from foreclosure. In three months, we were earning more than double what we’d received from long-term renters.”

This individual solution, replicated thousands of times across Greece, set the stage for profound market transformation.

Economic Impacts: Beyond Tourism Dollars

The Revenue Revolution

The economic impact of Airbnb in Greece extends far beyond simple rental income. By 2019, short-term rentals were generating approximately €1.4 billion annually, equivalent to roughly 0.74% of Greece’s GDP. During peak season, hosts in prime locations like Santorini or Mykonos can earn a month’s traditional rent in just three days.

This revenue shift has created a multiplier effect through related services—property management companies, cleaning services, maintenance workers, photographers, and interior designers now form a thriving ecosystem around short-term rentals. The Greek Property Managers Association estimates this secondary market employs over 50,000 people nationwide.

However, this economic activity comes with significant distribution inequalities. The top 20% of properties generate approximately 80% of total Airbnb revenue in Greece, with professional investors increasingly dominating the market.

Property Value Distortions

The Airbnb effect has reversed Greece’s post-crisis property devaluation, but not uniformly. Properties in tourist-friendly areas have seen price increases of 30-60% since 2016, while properties in non-touristic areas remain depressed.

This has created what economists call “hyperlocal markets” where property values can vary dramatically within the same neighborhood based on tourist appeal. In central Athens, properties within a 1-kilometer radius of the Acropolis have experienced value increases three times greater than similar properties just 2 kilometers away.

For property owners in prime locations, this represents unexpected wealth creation. For prospective buyers and renters, it’s created significant barriers to entry in desirable areas.

The Emerging Housing Crisis

Quantifying the Squeeze

The most tangible impact of Airbnb’s expansion is the contraction of long-term rental supply. A 2022 study by the Athens Observatory of Housing Prices found that neighborhoods with high Airbnb concentration have experienced a reduction in available long-term rentals by 46-58%. This supply squeeze has driven rental price increases that significantly outpace wage growth.

In Athens, average rents increased by 68% between 2016 and 2023, while average wages grew by only 7% during the same period. This disparity has pushed the rent-to-income ratio from approximately 30% to nearly 50% for many Athenians, well above the 30% threshold considered financially sustainable.

For specific demographics, the impact is even more severe. University students, young professionals, and service workers face particular challenges. The University of Athens Student Union reports that average student accommodation costs increased by 112% between 2015 and 2023, forcing many students to commute long distances or abandon studies altogether.

Social Fabric Under Pressure

Beyond numbers, there’s a profound transformation of community dynamics. Neighborhoods with high Airbnb density experience what sociologists call “transient population syndrome”—a breakdown in community cohesion as long-term residents are replaced by short-term visitors.

Dimitris Karakostas, president of the Athens Residents Association, explains the impact: “It’s not just housing that disappears—it’s the neighborhood baker who knew your name, the elderly neighbor who watched the street, the familiar faces that made these communities feel safe and connected. These social bonds take generations to build but can unravel in months.”

Historical neighborhoods like Plaka, Koukaki, and Exarchia—once vibrant residential communities with distinct cultural identities—have seen dramatic demographic shifts. In some blocks within these neighborhoods, over 75% of apartments have converted to short-term rentals, creating what locals call “ghost buildings” occupied almost exclusively by tourists.

The concentration of tourists also drives changes in local businesses. Traditional tavernas, family grocers, and neighborhood services increasingly give way to souvenir shops, international franchises, and high-end restaurants catering to visitor preferences. This “commercial gentrification” further erodes neighborhood identity and raises the cost of living for remaining residents.

Regional Case Studies: Athens, Santorini, and Thessaloniki

Athens: Uneven Transformation

The Airbnb effect in Athens represents a case study in uneven urban development. The city center has experienced the most dramatic transformation—particularly neighborhoods surrounding the Acropolis.

Koukaki, once a middle-class residential district, exemplifies this change. In 2015, it had approximately 160 Airbnb listings. By 2023, that number exceeded 2,800—representing roughly one-third of its total housing stock. This rapid conversion helped Koukaki appear on Airbnb’s global “trending neighborhoods” list, accelerating investor interest.

Kyriakos Papadopoulos, a 74-year-old retired teacher who has lived in Koukaki since 1973, describes the change: “Within 18 months, seven families in my building were replaced by Airbnb apartments. Now I barely recognize my neighbors. I used to buy coffee for €1.20; now the same café charges €4.50 for tourists. I’m a stranger in my own neighborhood.”

Yet just kilometers away in non-touristic neighborhoods like Kypseli or Patisia, the housing market follows entirely different patterns, highlighting how hyperlocalized the Airbnb effect can be.

Santorini: Island Economics Transformed

On islands like Santorini, the Airbnb effect takes on different dimensions. With geographical constraints limiting housing supply, the impact is particularly acute.

Santorini has approximately 15,500 permanent residents but hosts over 2 million visitors annually. Before Airbnb, this tourism was largely accommodated through purpose-built hotels. Now, an estimated 65% of the island’s housing stock is listed on short-term rental platforms at least seasonally.

This has created a severe housing crisis for workers essential to the tourism industry itself. Waitstaff, hotel employees, and shop workers often commute by ferry from neighboring islands or live in makeshift accommodations. Some hotels have resorted to building staff dormitories to retain employees who can no longer afford local housing.

Evangelos Karameris, owner of a restaurant in Oia, notes the irony: “We’re so successful with tourism that we can’t house the people who make tourism possible. I’ve lost excellent staff because they simply couldn’t find affordable housing. We’re approaching a breaking point where the system collapses under its own success.”

Thessaloniki: The Next Frontier

Greece’s second-largest city presents the newest evolution of the Airbnb effect. While Thessaloniki experienced Airbnb growth later than Athens, it’s now seeing accelerated conversion as investors look beyond saturated primary markets.

Between 2019 and 2023, Airbnb listings in Thessaloniki increased by 217%, with particularly high concentration around the Aristotle University campus. This has displaced the traditional student rental market, forcing the university to convert administrative buildings into emergency student housing.

Unlike Athens, where tourism has long been established, Thessaloniki’s transition represents a more speculative investor approach—banking on the city’s emerging status as a tourism destination. This higher-risk investment profile has led to more rapid neighborhood transition as investors seek to maximize returns before potential regulatory interventions.

Regulatory Responses and Policy Challenges

Greece’s regulatory response to the short-term rental boom has evolved from nonexistent to piecemeal. Initially, the government welcomed Airbnb as a mechanism for economic recovery without imposing restrictions. By 2017, as tax revenue concerns grew, regulations focused primarily on revenue capture rather than housing market impacts.

The current regulatory framework centers on three mechanisms:

1. Registration requirements: All properties must register with the Ministry of Tourism and display a registration number on listings. This system aims to track properties and ensure tax compliance.
2. Taxation structure: Short-term rental income is taxed progressively (15% for income up to €12,000, scaling to 45% for income above €35,000), with an additional 3.6% municipality tax.
3. Property limitations: Individuals cannot list more than two properties per tax ID, though this is easily circumvented through family members or corporate structures.

However, these regulations primarily address tax collection rather than housing availability or community impacts. More comprehensive approaches being considered include:

• Density limitations in specific neighborhoods
• Day-per-year rental caps (similar to Amsterdam’s 30-day limit)
• “Primary residence only” restrictions in certain zones
• Special permissions requirements for buildings with majority short-term rentals

These potential regulations face significant challenges, including constitutional property rights protections, enforcement limitations, and strong opposition from the growing short-term rental industry lobby.

Nikos Stathopoulos, former advisor to the Ministry of Tourism, explains the dilemma: “The government is walking a tightrope between addressing a genuine housing crisis and not killing the golden goose that’s bringing billions into the economy. There’s no consensus on where that balance lies.”

Stakeholder Perspectives: Winners and Losers

The Ownership Divide

Perhaps the most significant aspect of the Airbnb effect is how it has created sharply divergent experiences based on property ownership status. For property owners, particularly those who owned before the short-term rental boom, Airbnb represents opportunity and financial liberation. For non-owners, it increasingly represents exclusion and displacement.

Evangelia Paraskevopoulou, who owns three apartments in central Athens, represents the ownership perspective: “During the crisis, property felt like a burden with all the taxes. Airbnb turned that around completely. Now my properties generate enough income to support my entire family. Why would I give up €2,500 monthly for short-term rentals to accept €700 from a long-term tenant?”

Conversely, Antonis Michalopoulos, a 34-year-old teacher, represents the renter perspective: “I’ve been forced to move three times in five years as each apartment converted to Airbnb. My salary hasn’t changed, but my rent has doubled. I’m now commuting 45 minutes each way because I can’t afford anything closer to my school. Many of my colleagues have simply left Athens altogether.”

This divide increasingly follows generational lines. Older Greeks who purchased property before the crisis have options and opportunities, while younger generations face significant barriers to both rental and ownership markets.

The Investor Ecosystem

Beyond individual owners, a sophisticated investor ecosystem has developed around short-term rentals. This includes:

• International investment funds purchasing entire buildings for conversion
• Property management companies handling multiple properties for absentee owners
• Specialized renovation firms that convert traditional apartments to tourist-friendly units
• Real estate agents who now specialize in identifying “Airbnb-potential” properties

Elena Mavromati, CEO of Athens Prime Properties, a firm managing over 200 short-term rentals, describes how the market has evolved: “In 2015, we were mostly helping individual homeowners list spare rooms. By 2018, we were working with investment funds purchasing entire buildings. Today, our fastest-growing client segment is foreign investors who’ve never even visited Greece but see our returns outperforming their domestic markets.”

This professionalization has driven both property acquisition strategies and pricing algorithms that optimize returns far more efficiently than individual operators could achieve, further accelerating market transformation.

Balancing Tourism and Housing Needs

Models for Coexistence

As Greece grapples with balancing tourism revenue and housing needs, several municipalities are experimenting with models that could provide sustainable coexistence:

Zoned approach: Some islands are designating specific zones where short-term rentals are permitted or restricted. Nafplio has pioneered a system that allows unlimited short-term rentals in the tourist core but caps them at 20% of units in residential neighborhoods.

Temporal sharing: In seasonal tourism destinations like Rhodes, some property owners are adopting a hybrid model—short-term rentals during high season (May-September) and long-term rentals with 8-month contracts during low season. This provides housing for permanent residents while still capturing tourism revenue.

Cooperative housing: Several municipalities are exploring cooperative housing models that remove properties from the speculative market. The Athens Housing Collective has purchased four buildings to create permanently affordable housing specifically for workers in the tourism sector.

Incentive restructuring: Rather than just restrictions, some regions are exploring incentives that make long-term rentals more attractive. These include tax benefits, renovation subsidies with occupancy commitments, and guaranteed rent programs for owners who commit to long-term rentals.

Dr. Costas Apostolou, urban planning professor at the Technical University of Crete, believes these experimental approaches will define Greece’s path forward: “We’re past the point where simple restrictions or laissez-faire approaches will work. The future lies in sophisticated mixed models that recognize both tourism’s economic importance and housing’s social necessity.”

Navigating New Realities: Adaptation Strategies for the Greek Housing Market

The Airbnb transformation of Greece’s housing market isn’t a temporary trend—it’s a fundamental restructuring that requires all stakeholders to develop adaptation strategies. Rather than simply hoping for a return to previous conditions, forward-looking approaches must acknowledge the new reality while addressing its challenges.

For communities, this means developing resilience mechanisms that preserve neighborhood identity even amidst tourism pressure. The Anafiotika Cultural Association in Athens offers a compelling model—they’ve established community ownership of key spaces, regularly scheduled resident-centered events, and neighborhood integration programs that specifically include newly arrived residents.

For policymakers, effective responses must move beyond reactionary approaches to proactive housing strategies. This includes:

• Expanding public housing investments to create supply outside market pressures
• Creating specific protections for vulnerable populations (elderly, students, essential workers)
• Developing tourism management plans at neighborhood rather than city scale
• Implementing sophisticated data monitoring systems to enable evidence-based interventions
• Exploring innovative ownership models that bridge private incentives and public needs

For individuals navigating this transformed landscape, adaptation requires both practical and perspective adjustments. Non-owners might need to consider emerging opportunity areas or co-living arrangements, while owners must weigh immediate gains against long-term community sustainability.

The question isn’t whether Greece can return to its pre-Airbnb housing market—it can’t. The question is whether it can develop a new equilibrium that preserves the economic benefits of tourism while ensuring housing remains accessible to those who make Greece not just a destination, but a home.

How will your community, property, or housing situation adapt to these new realities? The answer to that question will shape not just individual outcomes, but the very character and sustainability of Greece’s cities and islands for generations to come.

Frequently Asked Questions

Has Airbnb been the sole cause of Greece’s housing affordability issues?

No, Airbnb isn’t the only factor driving housing affordability challenges in Greece. The economic crisis, austerity measures, limited new construction, and broader international investment trends have all contributed. However, research indicates that in tourist-heavy areas, short-term rentals have been the dominant factor in recent price increases. A Bank of Greece study found that neighborhoods with high Airbnb density experienced rent increases 2.3 times higher than comparable areas with low Airbnb presence. While Airbnb didn’t create Greece’s housing challenges, it has significantly accelerated and intensified them in specific areas.

Are there any benefits of Airbnb for local residents who don’t own property?

Yes, there are several indirect benefits. The short-term rental market has created employment opportunities in property management, cleaning, maintenance, and guest services that didn’t previously exist. In many tourist areas, Airbnb has extended the tourism season, creating more year-round employment. Additionally, property tax revenue from increased valuations supports municipal services that benefit all residents. However, these benefits are unevenly distributed and often don’t fully offset the challenges of increased housing costs for non-owners. The most significant benefits accrue to those who already owned property before the Airbnb boom.

What happens if Greece implements strict regulations on short-term rentals?

The impact would depend on the specific regulations and their enforcement. Based on experiences in cities like Barcelona and Amsterdam, strict enforcement of meaningful limitations typically leads to three outcomes: 1) Some properties return to the long-term rental market, increasing supply and potentially moderating rents; 2) Some investors sell properties, potentially cooling speculative price growth; and 3) Tourism adapts by shifting toward traditional accommodations or less-regulated areas. However, overly restrictive regulations could also reduce tourism revenue and property values if implemented too abruptly. The most successful regulatory approaches have been phased, geographically targeted, and paired with incentives for long-term rentals, allowing markets to adapt gradually rather than collapse.

Article reviewed by Liam O’Connor, REITs Analyst | Tax-Efficient Property Holdings, on May 15, 2025