Ibiza Holiday Rentals Plunge as Spain Cracks Down on Overtourism

Spain’s airports handled a record 321.6 million passengers in 2025, a 3.9% increase from the previous year, according to Aena. Madrid’s Adolfo Suarez Barajas remained the busiest airport, followed by Barcelona-El Prat and Palma de Mallorca. The growth reflects Spain’s enduring appeal despite global airline challenges, including labor shortages and rising operational costs.

However, the tourism boom has intensified pressure on the housing market, prompting the government to introduce stricter rental controls. A new decree will cap room rents and tighten seasonal lease conditions to curb rising housing costs. The policy includes tax rebates for landlords who renew leases without raising rents, addressing long-standing concerns about affordability.

Meanwhile, the number of short-term tourist rentals in Ibiza dropped by nearly half in 2025 compared to the previous year. The supply of such rentals on the island is now 80% lower than in 2017. Authorities have increased inspections to eliminate unauthorized listings, while Barcelona plans to ban all holiday homes by 2028.

Why Did This Happen?

Spain’s housing shortage has been exacerbated by the rapid growth of the short-term rental market, which has outpaced hotel development. Nearly one-third of tourists in Spain still opt for holiday homes over hotels, which remain cheaper. The surge in demand for tourist accommodation has led to rising rents and home prices, intensifying local complaints about housing affordability.

In response, the government has prioritized long-term rental stability. The new decree aims to ensure that seasonal and room rents do not outstrip the availability of long-term housing. By introducing rent controls in high-pressure areas and tightening conditions for short-term leases, the government seeks to rebalance the market.

How Did Markets React?

The tightening of rental rules has had an immediate impact on the availability of holiday homes in popular tourist destinations. Ibiza and Mallorca saw the steepest declines in short-term rentals, while cities like Malaga and Almeria continued to expand their tourist accommodation supply. The enforcement of new registration requirements for landlords listing properties on platforms such as Airbnb has been a key driver of these trends.

The car rental market, meanwhile, continues to grow, with projections showing it will reach US$337.1 billion by 2033. This suggests that despite regulatory changes affecting short-term housing, the broader travel sector remains resilient. The expansion of car rental services is expected to accommodate increasing tourist mobility needs.

What Are Analysts Watching Next?

The success of Spain’s new policies will depend heavily on regional enforcement. While the national government has introduced measures, many of the necessary actions fall under the jurisdiction of regional authorities, many of which are governed by opposition parties. This could lead to inconsistent implementation and potential resistance.

Aena is already planning for future demand by developing its investment strategy for the 2027–2031 period. The company has highlighted the need for infrastructure expansion to accommodate the growing number of travelers, underscoring the importance of aligning regulatory changes with long-term development goals.

Analysts will be watching how the housing market evolves in response to these changes. The availability of affordable housing is a key factor in sustaining Spain’s role as a top European tourism destination. If the policies succeed in stabilizing the market, they could also influence similar regulations in other tourist-heavy regions across Europe.