Unchecked tourism growth, fueled by increased air traffic, is driving an unaffordable housing crisis across Europe, says the NGO Transport & Environment (T&E). Some of the most popular destinations, like Spain, Portugal, Italy, and Greece, have seen protests from residents in the high-season summer months, often due to the strain on affordable housing. Southern Europe and Ireland seem to be the hardest hit.
A new study by the New Economics Foundation (NEF), commissioned by T&E, reveals that the average annual rents in five of Europe’s largest tourism-dependent economies are projected to rise by up to €250 per year over the next five years (2026-2031) as a consequence of incoming air tourism. These increases will primarily affect lower-income households, as incomes fail to keep pace with rental costs.
In absolute terms, Ireland is expected to see the largest rise, facing a rent increase of €250 per year. In relative terms, Greece, Portugal, and Spain are forecast to see the largest increases, with rent price rises of €160-€220. As house and rent prices are sensitive to international tourism arrivals, regardless of mode of transport, the study isolates the contribution of air transport.
Transport by air
The study highlights that European regions facing the most intense local backlash against overtourism, such as the Balearic Islands, Crete, and Madeira, almost always record the highest foreign-arrival volumes per resident, with the vast majority arriving by air.
The aviation sector is responsible for an estimated 52% of the global tourism industry’s direct emissions and much of the sector’s emissions growth. In Europe, emissions from international tourist arrivals by air are projected to rise over 60% between 2016 and 2030.
Despite growing concern over the impacts of tourism on local communities and the region’s climate risks, European governments continue to double down on aviation- and tourism-driven growth. Spain has committed €12.9 billion toward airport investment, including the expansion of the Barcelona and Madrid airports. Athens is currently rolling out a €1.3 billion expansion to boost annual passenger capacity by 25%, while terminal expansions are actively underway in Lisbon.
“This study proves we cannot separate the anti-tourism protests on the ground from the surge of flights arriving overhead,” Denise Auclair, Head of T&E’s Travel Smart Campaign, states. “Trying to manage tourism overcrowding while simultaneously expanding airports in Dublin, Barcelona, or Lisbon is a losing battle,” she adds. “
If governments are serious about protecting affordable housing and meeting climate targets, they must put an immediate stop to airport expansions and reconsider strategies for tourism and transport connectivity,” she concludes.
Most economic impact assessment approaches in aviation fail to consider effects on property and rent prices, even where such consequences are at the very top of the political agenda. According to the study, failing to recognize how much air traffic growth drives overtourism and its impacts on communities will result in a narrow and inefficient government response, T&E considers.
No salary benefits
The analysis also shows that increased air transport growth doesn’t necessarily translate into higher wages for workers. In fact, nations with the highest volumes of air tourist arrivals, such as Italy, Spain, and France, have performed the worst in terms of real-terms wages for tourism sector workers, leaving local hospitality workers with falling pay while facing rising living costs.
At the same time, large businesses are capturing a growing share of the money tourists spend on accommodation in Spain, France, Greece and Italy. Yet, local tourism workers aren’t seeing any benefits in their salaries.
“So often when airports expand, local communities are promised a wealth of economic benefits, but what we’re seeing in the data challenges this assumption. Jobs have been created, but the low wages they offer are poor compensation for rising housing costs, stretched infrastructure and increasing pollution,” Dr. Alex Chapman, Head of Economic Policy at the New Economics Foundation, said.
Dr. Chapman continued, “These impacts are also damaging to the wider economy. Our analysis shows that investment in non-tourism businesses declines as investors opt to accumulate property instead. This leaves workers trapped by their housing costs, unable to move to better work or invest in their skills.”
Equitable value creation
Furthermore, higher property prices can reduce business investment in the wider economy. The study suggests that over the 2019-2031 period, business investment can be expected to fall most sharply in Greece, Portugal, Spain, and Italy. The largest losses in absolute terms hit Italy and Spain, which could lose €1.1bn and €1.0bn in annual investment, respectively.
This happens as higher prices incentivize investors to direct capital towards property rather than towards productive and innovative sectors, such as transport equipment (e.g., electric vehicles or trains) and information technology.
With emissions from tourist flights arriving in Europe projected to continue to rise, T&E recommends that the upcoming EU Sustainable Tourism Strategy contain steps to conduct a critical review of the impacts of international air tourism arrivals in Europe, considering effects in vital areas such as housing.
Secondly, to reduce international air arrivals in regions approaching tourism saturation, including ending plans for airport expansion; and, thirdly, to reconsider strategies for tourism and transport connectivity, such as prioritizing low-carbon transport like rail and improving workers’ wages to support equitable value creation.
