Tourists turf out tenants in Airbnb hotspots
New AHURI report examines the rise of short term letting in Sydney and Melbourne
8 November 2018
Properties listed on Airbnb account for nearly one in seven rental properties in popular Sydney and Melbourne suburbs, new AHURI research reveals.
The research, Technological disruption in private housing markets: the case of Airbnb, undertaken for AHURI by researchers from UNSW Sydney and Swinburne University of Technology, examines the extent short term letting (STL) is contributing to housing affordability pressures and highlights the most effective responses available to regulators.
The research identified that commercial Airbnb listings—whole dwellings that are available for more than 90 days each year—in both Sydney and Melbourne are concentrated in inner-city and beachside suburbs. This reduces the availability of long term rentals and creates further affordability pressure in areas that are generally well connected by public transport and within access to employment hubs, essential services and amenities.
In Sydney, commercial Airbnb listings are concentrated in the eastern suburbs (e.g. Bondi, Bronte and Coogee), Darlinghurst and Manly. In these suburbs Airbnb accounts for between 11.2 per cent and 14.8 per cent of all rental housing stock.
In Melbourne, commercial Airbnb listings cluster in Central Melbourne, Docklands, Southbank, Fitzroy and St Kilda, accounting for between 8.6 per cent and 15.3 per cent of rental housing stock.
‘As rental markets in Sydney and Melbourne are unaffordable for lower income renters, even a small reduction in available rental properties is concerning’, said lead researcher Dr Laura Crommelin from UNSW. ‘For tenants living in the ‘high demand’ suburbs there could be an increased risk of having their lease terminated if the owner decides it is more profitable or convenient to list the property on Airbnb instead.’
For home owners, the research identified a growing awareness that Airbnb hosting can be part of future property choices, with income used to fund extra consumption; mitigate housing costs; and to protect them in the event of unexpected repairs or housing market downturns.
As rental markets in Sydney and Melbourne are unaffordable for lower income renters, even a small reduction in available rental properties is concerning
We found some evidence that Airbnb is reshaping the market for investment properties in Australia’, said Dr Crommelin. ‘For example, real estate agents have been cited claiming investors will pay a 2 to 3 per cent premium for properties that show a higher-yielding Airbnb income stream. Similarly, Airbnb property managers told us their businesses have been growing rapidly, as some investors are achieving better returns on short term letting than long term rental.’
Compared to other markets, Sydney and Melbourne have relatively unrestrictive STL regulation. An examination of policies in Sydney, Melbourne and nine key overseas jurisdictions, including London, New York City and Paris, found there are three broad approaches to regulating STL:
- a permissive approach—where STL is mostly allowed without prior permission or notification.
- a notificatory approach—where STL is mostly allowed, provided the host first notifies anauthority.
- a restrictive approach—where STL is mostly banned, or allowed only where an authority givesspecific permission.
The report recommends that, while Melbourne and Sydney have each taken a permissive approach, the notificatory approach is a better option. Giving hosts an identification number allows local and state governments to check compliance with limits on days let and restrictions on listing multiple properties.
The report can be downloaded from the AHURI website.
Dr Laura Crommelin will present findings from the research at the upcoming AHURI one-day conference ‘Disrupting the housing market’, taking place in Hobart at the Hotel Grand Chancellor on Tuesday 4 December 2018.