The short-term rental market is contributing to the ongoing housing shortage and pushing up weekly median rents for long-term renters, according to the latest research.
The significantly higher returns for properties rented out on Airbnb, or similar short-term rental sites, are driving investors to put their properties on the short-term rental market rather than renting them out on longer leases.
This is having a negative effect on housing affordability in capital cities and tourist hotspots making it hard for locals to find and afford rental properties in the places where they live and work.
A recent study by Grounded Community Land Trust Advocacy looked at the effect that the short-term rental market has had on 13 Australian tourist areas, including the Mornington Peninsula, Byron Bay, Noosa Heads, the Whitsundays, and Apollo Bay.
They discovered that at current market rates, earnings from the short-term rental market were 80% above long-term rentals.
Investors who were aware of the huge profits to be made on the short-term market were likely to choose this option over listing their property on the long-term market and this has reduced the number of available properties to rent for locals looking for a home.
The research claims that short-term rentals accounted for a median 34.6% of the long-term rental supply pool, across the 13 areas studied.
Additionally, net profits of $584.6m were generated from all the short-term rentals across the 13 locales and of these areas the Whitsundays was the most profitable raking in $60,125 per annum above long-term rentals.
Three quarters of new housing supply has been directed to short-term rentals in the past decade in these 13 areas and Hepburn Shire, Byron Bay, Apollo Bay, and Noosa Heads had more short-term rentals than long-term.
In Apollo Bay and Noosa Heads short-term rentals were more than twice the number of long-term rentals.
In July, only 1.4% of total rental properties in Australia were listed to rent; which is a critically low number when population growth and migration has increased the demand for rentals, especially in the major capital cities.
And the smaller tourist towns are being hit particularly hard, with locals who have grown up in these towns being driven away by the lack of affordable rentals.
According to the study, "In the regional Victorian town of Warburton, short-term rental supply grew at nearly ten times the locality’s total housing supply rate and long-term rental supply fell by 36% over the decade to 2021."
For locals, this can mean having to move away from the areas where they grew up and where their friends and family still reside.
Median weekly rents for long-term rentals have grown by 45% since the start of the pandemic, and in some localities such as Perth and Regional QLD the increase is even higher.
Short-term rentals will continue to contribute to the shortage of available properties for long-term renters if investors make more money using Airbnb and other short-term rental sites.
The author of the report suggested putting a cap on the number of short-term properties through a licensing system so that more properties would have to be put on the long-term market.
A number of councils have implemented annual fees for short-term rentals and limited the number of days a property can be on the short-term market; however, none have deterred investors enough to improve the volume of long-term rentals.
A combination of these measures may slightly reduce the number of short-term rentals on the market; however, the best remedy is to build more rental properties for the long-term market, such as build-to-rent developments where long-term leases are the norm.
