July 2024 was a turning point for short-term rentals in Greece, with prices falling for the first time in almost two years.
According to data published by AirDNA, the average daily rate (ADR) declined by 9.8% year-on-year, while occupancy also recorded a slight drop, mainly due to increased supply outpacing demand.
Increasing supply and demand in Europe
July was a dynamic month for the European short-term rental market, with total demand for overnight stays reaching 57.6 million, an increase of 17.7% compared to the same month in 2023.
Meanwhile, available listings on the platforms reached a new record of 4 million, up 15% year-on-year.
The increase in demand kept occupancy at a relatively high level, with the rate reaching 68% across Europe.
However, despite strong demand and increased occupancy, the average daily rate in Europe recorded a decline, marking the first negative sign in the annual price change after 20 months of continuous increase.
ADRs last month fell by 1.5% year-on-year.
The price decline also had an impact on revenue per available lease (RevPAR), which fell 1.2% compared to July 2023. 
The Greek market recorded the biggest price drop
Greece, along with other European countries such as Norway and Sweden, experienced a significant drop in prices and occupancy rates.
The increase in the supply of short-term rentals in the country far outstripped the increase in demand, leading to negative pressure on prices.
This situation worsened in July as the fall in ADRs was combined with reduced occupancy, indicating that the market balance is beginning to shift.
Macroeconomic developments and the ECB’s forecasts
The recent fall in prices can also be linked to broader macroeconomic developments in Europe.
The European Central Bank (ECB) forecasts GDP growth of 0.9% in 2024, boosted by private consumption.
Despite falling inflation and rising employment, high interest rates continue to weigh on the housing market and economic growth, with the ECB expecting financing conditions to improve in the second half of the year.
Increased demand for short-term rentals in 2024 is in line with the ECB’s forecasts for rising consumer spending.
Overnight bookings have increased by 16% year-on-year, with the upward trend remaining unabated so far.
However, the slowdown in ADR growth since the beginning of the year suggests that increased supply is beginning to limit the ability of hosts to raise prices.
Crucial point in the fall in prices
The short-term rental market in Greece is at a critical point, as the balance between supply and demand is beginning to be disturbed.
The decline in prices in July signals a potential change in the market, which may affect future investment and profitability in the sector.
While demand remains strong, hosts will need to adapt to the new conditions by utilizing strategies to increase occupancy and maintain price competitiveness.
