Whilst tourists enjoy beaches and rainforest, Ilona Harker lives in her car after she and three flatmates were evicted from their rental property in the lead up to Christmas last year.
Harker, whose story was featured on a recent ABC report, feels she lost her home to the growing phenomenon of short term letting of properties through Airbnb and other disruptive technology platforms. All up, independent monitoring web site Inside Airbnb reports that Airbnb listings within Byron Bay totalled 1,794 in April – up from 1,500 in the same month 12 months earlier. Of these 1,204 were for entire homes, 582 were for private rooms and eight were for shared rooms.
Whilst these platforms deliver benefits, concern about short-stay apartment letting to visitors and tourists gobbling up dwellings which would otherwise be available to local residents for long-term rental is growing. Paul Spooner from the Byron Community Centre told the ABC that there was little in the way of affordable rental accommodation for permanent residents in the town. Harker says it is not uncommon for people to be kicked out of their house prior to peak holiday seasons.
In Tasmania, meanwhile, an Anglicare report earlier this year showed that the number of properties advertised for long-term rent in Hobart and the South of the state over the first week of April this year was less than half of its level five years ago. A snapshot of short versus long-term rentals advertised throughout Hobart conducted by The Mercury in May revealed that 306 properties were listed on Airbnb including 260 entire homes, whilst a further 123 were listed on Stayz (though some properties were listed on both sites). Simultaneously, only 90 properties were available in Hobart, West Hobart, North Hobart, South Hobart and Battery Point for long-term rent on realestate.com.au. Over the 12 months to February, The Mercury reports, rents in Hobart surged by 41 per cent.
This raises questions about the impact the growing popularity of short-term letting through platforms such as Airbnb is having on rental affordability.
According to Professor Peter Phibbs, Head of Urban and Regional Planning Policy at Sydney University, this varies according to the type of Airbnb arrangement in question and the state and characteristics of individual markets.
On the first issue, Phibbs classifies Airbnb use into two categories.
First, there are arrangements whereby home owners simply let out spare rooms within their residence or let out their entire house or apartment during short periods of temporary absence, such as whilst on holidays. This, he says, is unlikely to impact affordability as these dwellings would not have otherwise be available for long-term rent had Airbnb not been used.
Where this happens, Phibbs says affordability may or may not be impacted depending upon the market in question. In Hobart, where supply is tight, he says the effect could be significant. In less constrained markets such as Sydney, the impact is likely to be less substantial. Whilst tourism ‘hot spots’ like Byron might come under pressure, Phibbs says short stay offerings in other regional areas where vacancies are higher could help to absorb excess stock and to attract more visitors.
Moreover, Phibbs says it is important to look at rates of growth. Between January 2015 and April 2017, he said, overall listing numbers on Airbnb within Sydney rose by more than 50 per cent from 15,600 to 24,000. Should these growth rates be maintained, he said markets which may not be under pressure at the moment may start to come under pressure.
“If it’s someone sharing a spare bedroom in their home, particularly when it used to be vacant, then there is probably no impact on rental affordability,” Phibbs said.
“If you decide to rent out your home when you used to rent it out to a long-term tenant, then potentially it could have an impact upon affordability. It would depend on the nature of the market you are in.”
At the University of New South Wales, Chair of Urban Science Professor Chris Pettit recently launched a project that will look at the impact of disruptive technology such as Airbnb on the housing market. Whilst he believes Airbnb is having an effect and that this is likely to increase, Pettit stresses that his own research remains at early stages and that drawing definitive conclusions would accordingly be premature.
Currently, Pettit says there are around 21,000 current listings on Airbnb in Sydney (numbers fluctuate over weeks and months) of which around 60 per cent are for entire homes or apartments – around 12,000 to 13,000 whole homes and apartments.
As some of these homes may on the market for a small part of the year, however (i.e. whilst owners are on holidays), Pettit cautions against using this as a gauge of the number of homes which are being withdrawn from the long-term rental market courtesy of short-stay.
Instead, he says, one way to gauge this is to look at the number of ‘multiple listings’ which occur where multiple homes are listed on the site by the same owner. This, he says, is an indication that the owner is using the dwellings as stock in a short-term letting business.
An alternative is to look at the number of entire dwellings which are listed for more than 90 days – again a sign of either a short term letting operation or investors using Airbnb to derive a return on properties which would otherwise have been offered for long-term rent.
According to Pettit, dwellings listed in these ways account for around 31 and 24 per cent of Airbnb listings in Sydney respectively. Using these percentages, he says it is likely that the number of rental dwellings lost to Airbnb throughout the city equates to around 5,000 to 7,000. By comparison, at the time of writing, 16,543 properties were listed for long-term rent on Domain.com.au throughout Metropolitan Sydney.
Across cities and towns, Pettit says localities which draw a strong tourist population are likely to be most impacted. Speaking about Sydney, he said early indications from his research were that significant numbers of listings were centred around tourism hotspots such as Bondi Beach, Waverley City Council and the city centre.
As with Phibbs, Pettit emphasises that the exponential growth rates associated with the short-stay economy mean any impact upon the market is likely to become more significant going forward compared with the current situation.
He says increasing use of short-term letting is being driven by a growing awareness among landlords of their ability to achieve higher returns through these platforms compared with those available through long-term rent. Taking the example of a two-bedroom apartment in Brunswick in Melbourne’s inner-north, Pettit said landlords are able to earn an average of $150 per night on Airbnb (or $1,050 per week if occupied for seven nights) against $570 per week on the long-term rental market.
Questions about affordability come amid growing debate about the broader impact of disruptive technologies such as Airbnb and short-stay platforms in Australia. By increasing the number, diversity and affordability of accommodation options available, uptake of these technologies helps to attract more visitors to Australian cities, boosting sectors such as retail and tourism. For travellers, the authentic experience associated with Airbnb can provide a refreshing contrast with the commercialised experience offered through hotels. For home-owners, the ability to let out either unused rooms or entire homes when away provides handy income. For the economy, any short-term leasing of dwellings which would otherwise be left temporarily vacant helps to wring more value out of existing dwelling stock by making it work harder.
On the downside, complaints from apartment owners in respect of noise, unsavoury visitors, overcrowding (and associated fire danger), stress on common property such as elevators and the loss of ‘neighbourhood’ feel associated with having short-term visitors come and go on a regular basis are growing.
Aside from these issues, Pettit says technologies such as Airbnb may have a positive impact in terms home ownership affordability whereby the ability to rent out spare rooms provides home owners with flexibility to meet mortgage repayments should they fall upon hard times. In addition, he says, there may be opportunities for community housing providers to leverage opportunities through Airbnb in order to assist them in funding long-term housing projects.
On the flip side, he says having this option may influence buyer behaviour during auctions and thus have an inflationary impact upon house prices – a phenomenon Pettit intends to explore through his research.
Not surprisingly, Airbnb itself denies any negative impact upon affordability through services such as its own.
Describing efforts to attribute Australia’s housing affordability challenge to Airbnb as being ‘just as absurd as blaming smashed tomatoes and avocadoes’ (for housing affordability challenges), Airbnb Head of Public Policy ANZ Brent Thomas said affordability challenges are multi-faceted and require mature debate around fundamental issues such as taxation.
To support its case, Airbnb points to a number of reports. Speaking particularly of the situation in NSW, a 2017 report published by the Tenants Union of NSW concluded that as of yet, short term letting was not having any discernible effect upon rental affordability. A Grattan Report issued last year (again focusing on Sydney) found that short-term use of housing comprised only a small portion of housing stock and that any rent increases caused by the rise of short-stay rentals is likely to be localised or small.
Besides, the company argues, Airbnb listings account for just 1.4 per cent of the overall housing stock across New South Wales and 1.7 per cent across Tasmania.
Phibbs acknowledges the point about the Grattan report but cautions that this is based on data which is a year or two old and may not reflect either the current situation or the numbers going forward in light of the exponential growth in short-term letting.
In terms of policy, Phibbs and fellow Sydney University researcher Nicole Gurran are working toward putting out options based on overseas developments and experience. He says these could including limiting how frequently people are able to rent out properties on the short-term market and requiring those seeking to rent out units within an apartment complex to first obtain permission from the owners’ corporation.
Speaking particularly of New South Wales (where the government is undertaking an inquiry into short-term holiday letting), meanwhile, Pettit says the state should work toward having state-wide regulation. As to specific recommendations, he says his team will work on these as their research progresses.
As they grow in popularity, Airbnb and other platforms will have an impact.
Exactly what this means for long-term renters remains to be seen.