A sharp increase in the number of homes being put up as short-stay accommodation is adding to the ongoing rental crisis according to the Real Estate Institute of Australia (REIA).
REIA’s Short Stay Accommodation report found that in the March quarter, a total of 133,968 short-stay accommodation (SSA) places were available in Australia, an increase of 3.7 per cent over the quarter and a 22.8 per cent jump in the past 12 months.
REIA President Hayden Groves said the “enormous” increase in SSA is putting long-term renters under pressure and contributing to the housing crisis.
“While SSA has been an essential part of meeting high demand for domestic tourism accommodation, it is a driving factor behind the rental crisis,” Mr Groves said.
“As a crude equation, 133,968 on first glance appears to fill the forecast shortage of dwellings Australia will face by next financial year of 106,000.”
Mr Groves said that a staggering 109,726 (81.9 per cent) of short stay listings were dwellings that can transition between the long-term rental market and the short-stay accommodation market.
“Dwellings suitable for long-term rentals increased on short stay accommodation platforms 3.7 per cent over the quarter and 26.6 per cent over the past year,” he said.
“The eastern coast of Australia is the predominant provider of short-term accommodation, and where most of the crucial long-term housing is desperately needed.”
Mr Groves said in most capital cities, there are more short stay accommodation properties available than there are permanent rentals on real estate portals, with higher rates of return being offered to property owners.
The report found in the March quarter across Sydney gross annual income on a two-bedroom dwelling in the private rental market was $33,900 and it would take 122 days of successful hosting to make the same income if the asset was in the long-term rental market.
In regional NSW, it would take around 113 days of hosting to make the same income compared to a long-term rental investment.
While annual gross income on a two-bedroom property in the long-term private rental market in Melbourne was $27,100 and on average, it would take 124 days of successful hosting to make the same income in the short-term market.
For regional Victoria, on the same type of property it takes only 84 days of hosting in the short-stay market to earn that income.
In Melbourne, the coastal area of the Mornington Peninsula had the highest number of short-stay entire dwellings (4347).
This was a decrease of 2.2 per cent over the December quarter, but an incredible increase of 20.2 per cent over the past year.
The City of Melbourne had the second highest at 3667 – this was increase of 11.8 per cent over the quarter and a record 51.8 per cent over the past year.
For regional Victoria, Bass Coast had the highest number of short stay entire dwellings (1982), an increase of 1.1 per cent over the quarter and 24.5 per cent over the past year.
Of all short-stay accommodation places in Queensland, 22,371 were entire dwellings, of which 4066 (18.2 per cent) were in Brisbane and 18,305 (81.8 per cent) were in regional Queensland.
In the March quarter, 19,171 (85.7 per cent) of these were available in the previous quarter, 3200 (14.3 per cent) were newly listed this quarter, and 1225 available in the December quarter 2022 were no longer available.
According to Mr Groves, the rise of short-stay accommodation began in 2008 when Airbnb launched in San Francisco as a web-based platform and mobile app.
“Home-sharing platforms have substantially grown over the past decade,” he said.
“For instance, Airbnb as the global market leader, managed to multiply the number of guests finding accommodation through its platform from 50 million in 2015 to 800 million in 2022.
“Of particular interest to real estate agencies may be that short stay accommodation fees are significant – 15 to 25 per cent – when compared to much lower management service fees for long-term rentals.”
Mr Groves said the report comes at a time when vacancy rates in all our major cities and regions remain at critical lows.
“State and federal governments continue to grapple with how to quickly deal with Australia’s severe housing shortage across all housing segments: Public, social, affordable, private rental and home ownership,” he said.
“This report set out to quantify in an objective, fact-based way what the impacts of SSA are on renters; so we can look to formulate a policy response together with Government and short stay accommodation providers based on the best available evidence.”
According to the report, some councils including Byron Bay, are looking at capping the number of days a property can be rented as short term accommodation.
While other cities like Perth, require short stay rentals to be registered with the city and meet regulatory requirements.