New Delhi, Aug. 26 -- Airbnb once offered Indian homeowners an attractive alternative to traditional rentals, where yields typically remain around 2-4%. But the rapid growth in short-term rental listings is changing that equation, with falling nightly rates and rising competition putting pressure on hosts' returns.

Chandigarh-based Harshdeep Kaur experienced the shift after converting her home into an Airbnb in 2021. She initially expected a 25% premium over conventional rent.

"There was a lot of growth in the first 1.5 years, but then the response weakened as more people came to know about it," she told Mint.

Kaur said properties in the Chandigarh Tri-city area have grown from around 300 in 2021 to more than 800. To compete, she reduc...