Airbnb Not Significantly Detrimental to Rental Affordability in the City

After much debate, it appears that Airbnb is not making rents rise in the cities. It could be making it harder to find properties for long-term rental, but this is because of the tourist appeal that places like Sydney and Melbourne have.

The Australian Housing and Urban Research Institute (AHURI), which is a non-profit organisation that is funded by several universities and governments, has prepared a report on whether rental sites such as Airbnb were making the property prices increase.

The research team, who were academics from the University of New South Wales and the Swinburne University of Technology, investigated to what extent short-term leasing for holidays adds to the affordability of rental properties in the inner city parts of Melbourne and Sydney, as well as considering the beachside suburbs. If an entire house or apartment was listed as a rental for more than 3 months of the year, it was considered to be a commercial let.  The main reason people gave for renting out their own home was to help with the ever-increasing costs of being a homeowner.


Which Are The Most Popular Suburbs?

Sydney has a high amount of commercial Airbnb listings in Darlinghurst and also in the beachside areas of Bondi, Bronte, Coogee and Manly. These accounted for between 11 and 15% of all the properties listed for rent. At its peak, in December 2017 when there were 28,000 properties listed, it fell to 20,000 in February 2018. This is quite an increase from November 2014 when there were only 5,000 rentals listed.

It is thought that the spike in the listing was because of the amounts of tourists that visit Sydney at Christmas and to see its world-famous New Year’s Eve firework display.

Melbourne’s most popular suburbs for rental listing were Central Melbourne, Docklands, Southbank, Fitzroy and St. Kilda. In total the properties shown an Airbnb rose from 5,000 in August 2015 to 18,000 in February 2018.

The lead researcher, Dr Laura Crommelin, commented on the fact that as the cities rental markets are out of the price range of those on a lower income, even a small drop in the number of properties available is a concern.

The report suggested that the increase in short-term lets fuelled by Airbnb was taking properties away from the long-term market. It pointed out that in Melbourne this has been offset to some extent by a boom in the building of apartments, many of which were still unoccupied.

They found evidence that Airbnb is reshaping the Australian property investment market, with real estate agents claiming that many investors are now looking for properties that show a high yield from Airbnb rentals, and that they are prepared to pay extra for them.


Effects On the Economy

What the report did not touch on is the other effects this is having on the economy in these two cities. For example, Airbnb cleaning services have started up in several places, as the rentals need to be cleaned between visitors. Then there are the electricians, carpenters and all the other tradespeople that have benefitted, because the condition of these properties have to reach a certain standard to be rented out, and repairs have to be carried out immediately.

All these rentals have produced more work for these people, and that in turn has meant that they have had to employ people to help them, which is all good for the financial state of Sydney and Melbourne. Then there is more work for other people too, such as accountants, who help these newly self-employed people to complete their tax returns and prepare their payroll.


The Opinion Of Airbnb

As you might expect, Airbnb have disputed the findings of the report, saying they are deeply flawed, inaccurate and wholly unrepresentative as such as small sample (491 respondents) was used to collate the information from.

They also said that the Airbnb rentals represent less than 1 percent of the Sydney and Melbourne property markets, and that there are more serious reasons for the reports findings, such as taxation, planning systems and population growth. The Airbnb spokesperson also criticised the researchers for using unreliable data from AirDNA, which often overstates how often listings are booked. They also did not take into account that in Sydney the vacant rental property rate is at its highest for 13 years, and that they chose to ignore the facts that rents have been falling in some parts of both cities.

AHURI defended the reports integrity by saying ”We emphatically refute the Airbnb statement and are confident that a comprehensive reading of the report would repudiate the claims made.”