What makes a city good for Airbnb investment

A strong Airbnb investment city comes down to four things working together.

Nightly rate (ADR). What a well-run listing charges per night on average across the year. Higher-rate cities give you more revenue per booking.

Occupancy. How much of the year the property is booked. A high nightly rate means little if the calendar sits half empty.

Acquisition cost. A city can earn well but still deliver a weak yield if property prices are high. Gross income is only half the equation.

Regulation. Licensing, planning and short-let caps decide whether you can operate at all, and how easily. Tighter rules can protect existing operators by limiting new supply, but they raise the barrier to entry.

The figures below rank cities on nightly rate and occupancy, the two levers that set your gross income. Weigh them against local property prices and rules for the full investment case.

The best cities for Airbnb investment in 2026

These figures come from Houst’s pricing tool and reflect a typical well-run two-bedroom property in each city. They show the average nightly rate, occupancy, and the gross income those two produce over a year.

Edinburgh. The UK’s top earner. At an average of £330.90 a night and 75% occupancy, a two-bed earns around £7,445 a month, close to £89,300 a year. The August festival period lifts the annual average well above what the city does off-season. Note that Scottish short-let licensing is strict, so factor the licence into any purchase.

London. £236.64 a night at 76% occupancy, around £5,395 a month or £64,700 a year. The most dependable year-round demand in the UK, though high property prices soften the yield relative to income.

Brighton. £210.96 a night at 70%, roughly £4,430 a month or £53,200 a year. Strong leisure and events demand within easy reach of London.

Dublin. €205.77 a night at 70%, about €4,321 a month or €51,850 a year. Tight supply and firm demand, with Irish short-let registration now in force.

Manchester. £195.40 a night at 70%, around £4,103 a month or £49,200 a year. Lower entry prices than the south and no local night cap make it one of the stronger UK yield plays.

Bristol. £182.64 a night at 70%, roughly £3,836 a month or £46,000 a year. A steady, well-rounded market.

Two Australian markets outperform every UK city on gross income. Sydney averages A$561 a night at 82% occupancy, around A$13,801 a month or A$165,600 a year. Melbourne runs A$333.97 a night at 70%, about A$7,013 a month or A$84,200 a year.

When Airbnb investment makes sense, and when it does not

High gross income does not automatically mean a good investment. Run the case honestly.

It makes sense when the numbers stack up after costs and finance, the property suits short-let demand, the local rules allow it, and you either run it well or hand it to a manager who does. Cities that combine solid occupancy with reasonable entry prices, Manchester and Bristol are good examples, often beat higher-rate cities on yield.

Be cautious when acquisition costs are high relative to income (parts of London), where regulation is tightening (Edinburgh licensing, Dublin registration), or where a single event drives most of the annual figure. A property that only earns in one peak season carries more risk than the headline suggests.

The figures here are city averages. Your actual return depends on the specific property, its size, condition, location within the city and how well it is run.

Yield, not just income: the number that matters

Gross income is the headline, but yield is what you bank. A £64,700 London property and a £49,200 Manchester property can deliver very different returns once you account for what each cost to buy.

To compare cities properly, take each city’s annual gross, deduct running costs and management, then divide by the purchase price to get a gross yield percentage. Lower-priced cities with strong occupancy often out-yield the big earners, which is why Manchester and Bristol appeal to yield-focused investors while London and Edinburgh appeal to those prioritising absolute income and capital growth.

External context helps here. Check current average house prices for each city through the UK House Price Index, and confirm the short-let rules for your target city before you buy, for example via the government’s short-let policy pages.

How to model your own investment return

City averages get you to a shortlist. To decide on a specific property, model it directly. Our Airbnb investment calculator takes an address and bedroom count and returns estimated revenue, occupancy and net income after management fees, so you can compare two or three options side by side before committing.

If you want the wider picture on running one of these as a managed let, our guide to whether management is worth it covers the operating side in more detail.

This guide is general information, not financial or tax advice. Always speak to a qualified adviser about your situation.

Frequently asked questions

Is buying a property just for Airbnb worth it in the UK?

Yes, for the right property and location. Cities without night caps (Manchester, Edinburgh, Brighton) commonly achieve gross yields of 10-16% for professionally managed properties. London works with a hybrid STL/MTL model. Use the investment calculator to model your specific property before committing.

How much deposit do I need to buy an Airbnb investment property?

Most lenders require a minimum 25% deposit for short-let use. Some specialist lenders require 30-40%. Standard buy-to-let mortgages typically do not permit short-term letting, so specialist advice is needed before proceeding.

What are the risks of buying a property for Airbnb?

Regulatory tightening (night caps, licensing, levies), lower-than-expected occupancy, lease or OC restrictions discovered post-purchase, and higher operating costs than anticipated. Research regulations in your target city before buying and model income conservatively.

Is Airbnb better than buy-to-let in the UK?

For properties in high-demand short-let locations, gross Airbnb income typically exceeds buy-to-let. Operating costs are higher. In cities without caps and with year-round demand, the case for Airbnb over standard buy-to-let is strong for well-located properties.

Do I need a special mortgage for an Airbnb investment property?

Yes. Most standard buy-to-let mortgages do not permit short-term letting. A specialist holiday let or short-let mortgage is required. Always disclose intended use to the lender before proceeding.