Australian Housing and Urban Research Institute (AHURI) revealed that Airbnb is impacting both the housing and investment market, with properties listed on the rental website accounting for nearly one in seven rental properties in popular Sydney and Melbourne suburbs.
In its research Technological disruption in private housing markets: the case of Airbnb, AHURI found that short term letting (STL) is affecting the housing affordability pressures, as well as emphasising the most effective responses available to regulators.
It was identified that commercial Airbnb listings, defined as whole dwellings that are available for more than 90 days each year, in both Sydney and Melbourne, are mostly seen in inner-city and beachside suburbs. As a result, availability of long term rentals in these areas – which are well connected by public transport and within access to employment hubs, essential services and amenitie – are minimised.
More specifically, commercial Airbnb listings in Sydney are concentrated in the eastern suburbs, including Bondi, Bronte and in Coogee, Darlinghurst and Manly. In these suburbs, Airbnb covered between 11.2% and 14.8% of all rental housing stock.
Melbourne, meanwhile, has its mass of commercial Airbnb listings in Central Melbourne, Docklands, Southbank, Fitzroy and St Kilda, accounting for between 8.6% and 15.3% of rental housing stock.
Dr. Laura Crommelin from UNSW Sydney highlighted how the presence of Airbnb can hurt not only the overall market, but also consumers.
“As rental markets in Sydney and Melbourne are unaffordable for lower income renters, even a small reduction in available rental properties is concerning,” she said.
“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.”
More importantly, it was observed that that Airbnb hosting is like to be one of the property choices in the future, hence reshaping the market for investment properties in the country. Smaller housing cost and protection from unexpected repairs or housing market downturns, among others were some of the noted advantages of this option.
“For example, real estate agents have been cited claiming investors will pay a 2 to 3% 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,” Dr. Crommelin explained
What made this phenomenon happen? The study stated that compared to other markets, Sydney and Melbourne have relatively unrestrictive STL (short-term letting) regulation. An closer look on the policies in Sydney, Melbourne and nine key overseas jurisdictions, including London, New York City and Paris revealed that 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 an authority, and; a restrictive approach, where STL is mostly banned, or allowed only where an authority gives specific permission.
The research was conducted for AHURI by researchers from UNSW Sydney and Swinburne University of Technology.
