Tourist economies are creating a two-speed cost of living, and the people who lose out are rarely the visitors.
Across Europe, the UK coast, US resort towns and New Zealand’s southern lakes, a familiar pattern has re-emerged in 2026: rents, property prices and everyday goods rise sharply when tourist demand peaks, then slacken in the off-season without ever returning to pre-boom levels. For seasonal workers and long-term residents, that asymmetry — inflation that sticks and deflation that doesn’t fully reverse it — is reshaping who can afford to live in the places that depend on them.
The rent ratchet
New research combining Eurostat rent data with air passenger volumes, published by the New Economics Foundation and reported by Euronews this month, puts numbers on a trend residents have complained about for years. Since 2019, tourism-driven demand has added roughly €342 a year to rents in Greece, €236 in Spain, €220 in Portugal and €202 in Italy. Notably, the study found little correlation with construction costs — Italy, Spain and Greece have seen only modest increases there — which points squarely at tourism flows, not building costs, as the driver.
Barcelona is the sharper end of that trend. The Columbia Economic Review notes that residential property prices in the city have risen roughly 38% over the past decade, pushing many residents out of neighbourhoods increasingly dominated by short-term lets — a pattern serious enough that the city has committed to phasing out all short-term rental licences by 2028.
The mechanism is straightforward and by now well understood in housing economics: short-term rental platforms let landlords earn tourist-season yields well above what a local, year-round tenant can pay. Supply that would otherwise serve residents is bid away by demand denominated in tourist, not local, income. Once converted to short-let use, that housing stock rarely reverts even when tourist arrivals soften, because the yield differential — not seasonal occupancy alone — is what drives the conversion.
Not just Europe
The same imbalance is visible well beyond the Mediterranean. In New Zealand, Queenstown’s average house price has passed NZ$1.8 million against a national figure just above NZ$900,000, and RNZ reports that around 30% of homes in the district now sit empty for parts of the year — holiday properties rather than housing stock. Local leaders have started describing the risk of a “zombie town”: a place with the infrastructure of a community but a shrinking share of people who actually live in it year-round.
US mountain and coastal towns show a comparable dynamic. Colorado’s high-country “bedroom towns” — Gypsum, Leadville, Eagle — have seen population growth of many multiples since 1970 as remote workers and second-home buyers moved in behind resort towns like Vail and Aspen, according to state demographic data reported by Homes.com. Housing officials there describe a widening gap between service-industry wages and the cost of staying in the community those workers serve. In Florida, NPR reported in June that service workers around the Keys are being priced out of housing even as the broader cost of living continues to climb.
Deflation doesn’t rescue residents
The counterpart to this — off-season deflation — matters just as much and is less discussed. When tourist footfall drops, local retail and hospitality prices often fall too, and headline cost-of-living indices for a region can look calmer over a full year than the summer snapshot suggests. But this deflationary phase rarely does much for residents, for two reasons.
First, housing costs — the largest line item for most households — are sticky downward. A landlord who has re-priced a property against tourist-season yields has little incentive to cut rent to local-market levels once the season ends; vacancy for part of the year is often still more profitable than a long-term let at a lower rate. Second, off-season deflation frequently comes with reduced hours and seasonal layoffs in tourism-dependent local economies, so falling prices coincide with falling incomes rather than offsetting rising ones.
The net effect, visible in the data across multiple geographies, is a ratchet: prices — especially housing — climb in the peak, soften only partially in the trough, and reset at a higher floor before the next cycle begins.
Policy responses are converging on a similar toolkit
Governments are responding with tools that target the tourist side of the ledger rather than residents directly. Venice’s flat per-visitor charge of roughly €5 is being replicated elsewhere; Zaans Schans, a Dutch village of around 400 people, introduced an entry fee for visitors this year after arrivals reached 2.6 million in 2024, and Tenerife introduced an eco-tax on trail access into Teide National Park in January. France’s senate has approved a port-arrival levy modelled partly on Hawaii’s “green fee,” which is itself tied up in litigation over whether state tourism taxes can apply to cruise passengers.
Academic assessment of these measures, cited by outlets covering the 2026 fee wave, is mixed: fees raise revenue and may fund local infrastructure or housing programmes, but there is limited evidence they meaningfully reduce visitor numbers or reverse the underlying rental-yield economics that convert local housing into tourist accommodation. Barcelona’s approach — phasing out short-term rental licences entirely rather than taxing at the margin — is a more direct intervention, and one likely to be watched closely by other high-tourism cities deciding between revenue-raising and supply-restricting policy.
The bottom line
For markets participants, the read-through is that tourist-area property and local consumer prices are behaving less like a single cycle and more like two overlapping ones — a tourist-income cycle that inflates fast and a resident-income cycle that adjusts slowly, if at all. Any policy or investment thesis premised on “overtourism corrects itself” once demand cools should be treated with scepticism: the data so far suggests the correction is partial at best, and permanent residents are absorbing the difference.