Airbnb: ‘Residential rental crisis is not our fault’

We received a long and detailed email from Airbnb last week and we thought it was only fair to let you make your own minds up about the global holiday letting agency’s insistence that the current housing crisis is not their fault.

Of course, it’s not entirely their fault that there’s a shortage of rental accommodation around. A lack of home building and a surging demand for homes are key factors.

But that doesn’t mean that they have not contributed significantly to owners pulling their properties out of the permanent residential market, especially in popular holiday areas, instead making them exclusively available for tourists.

Just to add some facts to the discussion, the highly regarded website InsideAirbnb reckons that across the major centres it has surveyed in Australia, there are 60,000 entire houses and apartment that are listed on Airbnb.

And, as we know, Airbnb is only one of a number of short-term holiday letting (STHL) agencies.

Also, that doesn’t take into account Queensland which is not surveyed, presumably because the holiday rental culture is so embedded there, it’s hard to get an accurate read on the effect STHLs on residential rents (although state government is having a good long look at it).

But that hasn’t stopped a handful of academics claiming there’s no great issue there which, as you will see below, has been employed by Airbnb to support their argument that they aren’t doing any harm.

In any case, Airbnb routinely says InsideAirbnb.com’s figures are unreliable and inaccurate, culled as they are from “webscraping” the letting giant’s online listings.

Of course, if they are wrong, they could disprove them with a keystroke if they allowed outsiders to see the real figures – something they are loath to do for reasons of “privacy”.

Anyway, here is the text of a letter sent by Airbnb’s marketing people to me last week.  Read it and make up your own mind. But if you want to know what I think of it, listen to this week’s podcast or read the transcript.

And when Airbnb say that stopping STHRs won’t solve the problem, we should try not to let “perfect” be the enemy of “good”.

JimmyT

From Aleks Krajcer, Airbnb

Have read your recent coverage concerning Airbnb and short term rentals [and] now seems like a good point to share some info with you.

Always happy to provide comment as well as share some of our proposals on how we can positively impact gov’s challenge of alleviating housing issues.

This piece from the ABC just a few days ago points out that there just isn’t enough new supply to meet demand in Australia. The federal National Housing Finance and Investment Corporation (NHFIC) chief stated that “The rapid return of overseas migration — together with a supply pipeline constrained by decade-high construction costs and significant increases in interest rates — is exacerbating an already tight rental market.” 

The Reserve Bank of Australia (RBA) has also argued that the change in how and where Australians decided to live during the pandemic was one reason why rents did not drop sharply in most areas. “The premium for space at home, with ongoing work from home arrangements following the pandemic, has contributed to reducing average household size. This has been a factor in sharply falling vacancy rates,” the NHFIC notes.

While short-term rentals have been blamed by some as a central cause of a scarcity of housing availability in Australia, and in turn unaffordability, leading academics like the University of Queensland’s urban and economic geography Associate Professor Dr Thomas Sigler point out that “there is growing recognition that this housing crunch we are experiencing is not being caused by short-term rentals.” This analysis of Airbnb locations and rental prices for each postcode showed no overall correlation between rent increases and Airbnb density, with only a few areas overlapping with both high Airbnb density and high rental increases.

Dr Sigler has separately stated: “I think if you look at the overall numbers, blaming these digital rental platforms as a major cause of Australia’s rental and affordability crisis, particularly after COVID-19, is a bit of a distraction from the real issues at play.”

In this extensive report from UNSW, the impacts on housing affordability and supply in Queensland attributed to short term rentals are far less significant and ‘unknown’. On page 48 of the report it states that ‘whilst STR regulatory reforms may have the potential to somewhat relieve rental market stress in certain areas, such changes are far from a panacea for rising housing unaffordability across the state – a policy challenge which, as we have shown, has much broader and longer-term structural drivers.’

At the Queensland Government’s Housing Summit in late 2022, Treasurer Cameron Dick stated: “There are around 30,000 properties used for STRA in Queensland but overall it is Treasury’s view that the number did not increase over the period we are looking at.” This shows that while the number of STR listings has remained stable, rents and vacancy rates have grown, implying a disconnect between these factors and no clear causation.

In Western Australia – where the government is currently mulling a 60-night cap on short term rentals, the Real Estate Institute of Western Australia CEO has said that targeting short-stay accommodation simply drew attention from the broader issue – the need for a lot more rental properties, and that even if all these short-term rental properties suddenly converted to the rental market, it would not be enough.

Tasmania and Hobart is a good case study where STR has been attributed by council to have impacted affordability and availability. The state ranks second nationally with the highest proportion of unoccupied dwellings at 11.8 percent and filling these properties with renters needs to be an urgent priority. The Census reveals that whilst the population of the Hobart Local Government Area has increased by 13 percent since 2011, the number of private dwellings has increased by only seven percent. In nearby Launceston, their chief executive said that the conversion of long-term rentals into short-stay accommodation is not the key cause of the lack of available and affordable rentals in his part of the state.

As Census data released by the ABS last July demonstrates, one of the more pervasive issues in housing availability in Australia is the sheer volume of empty dwellings – over 1 million –  an enormous figure when contrasted with the comparatively tiny number of houses listed on short-term rental platforms. 

Further, Australia has 13 million spare rooms sitting empty around the country, and 70 percent of households have at least one spare bedroom, according to the 2021 Census. More than one in four homes in Australia are single person households.

The Grattan institute’s Brendan Coates has spoken and published a great many resources on Australia’s housing market, and how to remedy certain elements of supply and affordability, and short term rentals are not cited among these points. See https://grattan.edu.au/housing/ and https://grattan.edu.au/news/the-great-australian-nightmare/