100s of titles, one news app for just $10 a month.
Dive Deeper:
Housing crisis faces Tasmanian women and children fleeing unsafe domestic situations, but some hope on horizon
After leaving a toxic relationship, Amy Bourke was desperate to find a home that would give her son Chance some…
Rental stress, cost of living pressures forcing Tasmanians into cars as winter approaches
With Hobart rental costs rising nearly 30 per cent in five years, Tracey Ransley has resorted to living in her…
South Coast sellers cash in, but it comes at a cost for renters
Among the region's biggest gains was the $10 million sale of a Mollymook home, five years after it changed hands…
An ethical problem aired for online travellers by Airbnb
The travel site is trying a new approach to ease problems of over-tourism
One subscription that gives you access to news from hundreds of sites
WA housing crisis forces Exmouth workers to sleep in their cars
Many workers who have moved to the WA tourist town are struggling to find affordable rental properties or share accommodation.
Can’t buy, can’t rent: an entire generation is left with nowhere to turn
‘Better living made simple” reads the slogan on the hoarding around The School Yard — a near-completed block of apartments…
Get all your news in one place
Latest Business news:
Bitcoin Recovers to $30,000 Area After Shedding Weekend Weakness
Bitcoin recovered to around $30,000 after spending most of the weekend below that level.
Read news from The Economist, FT, Bloomberg and more, with one subscription
Learn More
How to Make Money (or Even Get Rich) During a Stock Market Crash
A crash creates buying opportunities if you can develop the right mindset.
HSBC suspends head of responsible investing who called climate warnings ‘shrill’
Bank investigating Stuart Kirk’s conference speech deriding flooding risks and climate warnings from UN and Bank of England
Former NAB manager quizzed on Star scheme
A former NAB employee has told an inquiry into Star Entertainment Group's Sydney casino he had no knowledge of a…
After $5 Trillion Rout, Emerging Markets Seek Turnaround Signal
The wreckage of a $5 trillion rout in emerging markets is starting to look like a buying opportunity to some…
From analysis to good news, read the world’s best news in one place
New Zealand PM Ardern to visit U.S. to boost exports, lure tourists
New Zealand Prime Minister Jacinda Ardern will visit the United States this week in a bid to boost exports and…
Rod Sims says Facebook should be forced to negotiate with SBS under news media bargaining code
Despite dozens of deals to pay Australian news publishers for content, social media company has left out SBS and the…

After 10 years of Airbnb and short-stay rentals, is Australia ready for regulation?

For six months after breaking up with her partner, aged care worker Adriana Breen searched for a rental home on Victoria's Mornington Peninsula.

"The rental market was just non-existent," she said.

"The rents were unaffordable as well. You're looking at $400-plus where they used to be $280."

Ms Breen still works on the peninsula, but she no longer lives there.

Instead, she has to drive the 80-kilometre round trip from Frankston, in Melbourne's south-east, every day.

"Mentally it affects me because this was my happy place — I love the peninsula," she said.

"I know it's only half an hour down the road, but it could be on the other side of the Earth as far as I'm concerned because I'm not near my family."

Aged care worker Adriana Breen had to move away from her family to find an affordable rental. (ABC News: Darryl Torpy)

Ten years ago the Mornington Peninsula had a "healthy" rental vacancy rate of 3 per cent, but it's now at 0.7 per cent.

Experts — using figures from independent advocacy and data group InsideAirbnb — say for every vacant rental, there are about 30 short-stay rentals available on Airbnb.

"Non-metropolitan Australia has … always had tight rental markets," urban planner and policy analyst Nicole Gurran said.

"Even a small increase — and we've seen a significant increase — in demand for housing associated with the short-term tourism market is going to exacerbate those tight rental vacancy rates." 

University of Sydney urban planner and policy analyst Nicole Gurran. (ABC News: John Gunn)

But coastal communities are facing more than an increase in short-term accommodation. During the pandemic, people have fled the cities and moved to regional areas.

"With the increase in demand from people moving to coastal locations … combined with the increase in tourism demand, that's created a perfect storm in which rental vacancy rates are pitifully low," Professor Gurran said.

There are about 100,000 Airbnbs properties across Australia, according to figures from data group AirDNA. About 85 per cent of those are entire homes.

And while short-term stays have always been popular in coastal areas and tourism hotspots, when it launched in Australia 10 years ago, Airbnb brought holiday homes to capital cities.

"In Australia we haven't had a tradition of having holiday homes in our major cities," Professor Gurran said. 

"So when we see the cluster of short-term rentals around [our big cities] it's safe to assume that those are residential homes and apartments that have been withdrawn from the permanent rental market."

The COVID-19 impact

The sharing platform says it has boosted local economies by attracting tourists and creating jobs.

An Oxford Economics report found Airbnb contributed more than $10 billion to Australia's economy in 2019.

But a 2019 report by America's Economic Policy Institute found that Airbnb's economic benefits were outweighed by the cost to renters.

Then in 2020, global tourism ground to a halt.

"COVID really showed there's a connection between the short-term rental market and rents all across Australia, and indeed across the world," housing researcher Peter Phibbs said.

Peter Phibbs says regulation helps protect long-term rental markets in other countries. (ABC News: Luke Bowden)

In the Tasmanian capital of Hobart, residents have been in the midst of a housing crisis that predates COVID-19.

Professor Phibbs said the number of Airbnbs in the city equated to about 9 per cent of the total rental market. 

That is much higher than in any other capital city in Australia.

And Hobart's rental vacancy rate is just 0.3 per cent — the lowest for any capital city.

During the pandemic, the balance has shifted.

"When housing stock went from short-term rental back to the long-term rental market, in places like Hobart we saw a sharp reduction in rents," he said.

The pandemic saw rental prices fall in Hobart. (ABC News: Luke Bowden)

Professor Phibbs estimated that during COVID, rents in Hobart dropped by about 9 per cent. 

Another study in Sydney by William Thackway and Christopher Pettit found rent prices in the most active Airbnb neighbourhoods dropped by up to 7 per cent.

While not all of this can be attributed to Airbnb, Professor Phibbs said the evidence was clear: You cannot have an unregulated short-term accommodation industry and a healthy long-term rental market. 

"Those two things just can't co-exist," he said.

"We need some sort of regulation to limit the spread of short-term rentals so we can enable the long-term rental market to provide homes for so many households that are looking for them at the moment."

A question of regulation

Across the world, major tourist destinations are moving to regulate short-stay rentals.

In Amsterdam, an entire home can only be rented out for a maximum of 30 nights per year.

While in New York, it is generally illegal to rent out an entire unit for less than 30 days. Although there are exceptions.

Meanwhile, Berlin allows you to lease out your primary residence, but it can be a bit harder to put a second home on the short-term market and you can only let a secondary residence out for a maximum of 90 days.

"Making the regulation is probably the easy part," Professor Phibbs said.

"Enforcing the regulation can be quite difficult. It's certainly resource-intensive. It sometimes involves quite long legal processes.

"It's important to have some kind of taxing regime where short-term rentals pay for the cost of that regulation through some sort of bed tax."

In Australia, New South Wales has 180-day caps in some areas, while Western Australia has been investigating a 60-day cap.

Meanwhile, Hobart is hoping to become the first capital city to place a cap on the number of short stays.

Hobart may lead the way in regulating short-term rentals in Australia. (ABC News: Luke Bowden)

If successful, it will stop any more entire homes from becoming short-stay accommodation.

But it could take a while to change the planning scheme, and in the meantime it could prompt a rush on converting homes to short stays.

Professor Phibbs said it was a blunt option, but the only one available to the council.

"A partnership between local councils and the state government, where local councils could make decisions based on their particular housing markets but there was an overall state government framework that allowed them to do that, would be ideal," he said.

In a statement, Airbnb country manager for Australia and New Zealand Susan Wheeldon described the proposed changes in Hobart as ill-considered and said they would place the city and Tasmania on unequal footing with the rest of the nation.

"Housing affordability and availability is a complex issue with a range of contributing factors," she said.

"In markets that are traditionally popular with holiday-makers and have always comprised holiday homes, vacancy rates have faced significant pressure due to the relocation of many Australians from cities to regional areas throughout the pandemic.

"In many cases, hosts make properties available on our platform that would otherwise be used only as holiday homes."

'A complex issue'

Louise Elliot owns a short-stay property in Hobart, and is the president of the Tasmanian Residential Rental Property Owners Association. 

Ms Elliot, who is running for a seat on the Hobart City Council in 2022, said blaming short-stay properties for the rental crisis was "very short-sighted".

"It's a really complex issue. Short stay is a small component of that issue … but it's not the biggest factor," she said.

"We need far more social and public housing and we need the processes for building new homes to be more straightforward."

Hobart short-stay accommodation owner Louise Elliott says there are many issues behind the rental crisis. (ABC News: Maren Preuss)

Ms Elliot also rejected the idea that all of the entire homes [listed as short stay] would have otherwise been rentals.

"All you have to be to be a whole home is to have your own kitchenette, toilet or entrance," she said.

"A lot of those homes, they’re either under people’s houses, on people's properties or they're places that they'd otherwise leave unoccupied."

She said it made sense for some kind of regulation to be considered, but she said it needed to take into account the benefits of the industry.

"Density limits or prohibiting businesses from owning short-stay properties makes sense, but I think it needs to be a much more rounded discussion," she said.

"I don't think blanket bans make sense because there can be unintended consequences.

"We need to recognise the benefits of tourism and how important that is to our communities."

Editor's note (17/05/2022): This story has been amended to reflect that Louise Elliot is president of the Tasmanian Residential Rental Property Owners Association and is running as a candidate in the 2022 Hobart City Council election.

What is inkl?
The world’s most important news, from 100+ trusted global sources, in one place.
Morning Edition
Your daily
news overview

Morning Edition ensures you start your day well informed.

No paywalls, no clickbait, no ads
Enjoy beautiful reading

Content is only half the story. The world's best news experience is free from distraction: ad-free, clickbait-free, and beautifully designed.

Expert Curation
The news you need to know

Stories are ranked by proprietary algorithms based on importance and curated by real news journalists to ensure that you receive the most important stories as they break.

Dive Deeper:
Housing crisis faces Tasmanian women and children fleeing unsafe domestic situations, but some hope on horizon
After leaving a toxic relationship, Amy Bourke was desperate to find a home that would give her son Chance some…
Rental stress, cost of living pressures forcing Tasmanians into cars as winter approaches
With Hobart rental costs rising nearly 30 per cent in five years, Tracey Ransley has resorted to living in her…
South Coast sellers cash in, but it comes at a cost for renters
Among the region's biggest gains was the $10 million sale of a Mollymook home, five years after it changed hands…
An ethical problem aired for online travellers by Airbnb
The travel site is trying a new approach to ease problems of over-tourism
One subscription that gives you access to news from hundreds of sites
WA housing crisis forces Exmouth workers to sleep in their cars
Many workers who have moved to the WA tourist town are struggling to find affordable rental properties or share accommodation.
Can’t buy, can’t rent: an entire generation is left with nowhere to turn
‘Better living made simple” reads the slogan on the hoarding around The School Yard — a near-completed block of apartments…
Get all your news in one place