The emergence of short-term rental websites like Airbnb and Stayz has completely transformed Australians’ travel and real estate investing habits. However, there have also been heated discussions concerning this burgeoning trend’s effects on housing affordability. The topic of whether short-term rentals are making the housing problem worse emerges as places like Perth struggle with a lack of available accommodation and rising rents. Let’s examine the matter further using perspectives from Australian real estate specialist Bargoti Real Estate.

1. Property owners can profit significantly from short-term rentals, particularly in tourist-friendly areas. Short-term lodging has become increasingly popular in places like Perth, which is renowned for its breathtaking beaches, thriving cultural scene, and mining-based economy.

2. Because short-term rentals provide higher weekly rates and fewer tenant duties, many homeowners and investors have turned their attention away from long-term leases.

3. Nevertheless, this change has unforeseen repercussions. The overall housing supply for locals is diminished by short-term rentals, which take properties off the long-term rental market. This disparity makes it harder for people looking for affordable housing because it raises rents and housing costs.

Breaking Down the Latest Research: What You Need to Know?

1. Investors choose to list their properties for short-term rental rather than longer-term leases due to the noticeably greater profits for houses rented out on Airbnb and other short-term rental websites.

2. This is negatively impacting housing affordability in capital cities and popular tourist destinations, making it more difficult for residents to locate and afford rental houses in the areas where they live and work.

3. The impact of the short-term rental market on 13 Australian tourist destinations, including the Mornington Peninsula, Byron Bay, Noosa Heads, the Whitsundays, and Apollo Bay, was examined in a recent study conducted by Grounded Community Land Trust Advocacy.

4. They found that short-term rental earnings were 80% higher than long-term rentals at current market rates.

5. Since there are fewer rental homes available for residents looking for a place to call home, investors who were aware of the enormous profits to be earned on the short-term market were inclined to pick this choice over advertising their property on the long-term market.

6. According to the study, in the 13 regions examined, short-term rentals made up a median of 34.6% of the long-term rental supply pool.

7. Furthermore, a total of $584.6 million was made from short-term rentals in all 13 locations; the Whitsundays were the most lucrative of these, earning $60,125 a year more than long-term rentals.

8. Hepburn Shire, Byron Bay, Apollo Bay, and Noosa Heads had more short-term rentals than long-term rentals, and throughout the last ten years, three-quarters of the additional housing supply in these 13 locations has been allocated to short-term rentals.

9. There were more than twice as many short-term rentals in Apollo Bay and Noosa Heads as long-term rentals.

10. Only 1.4% of all rental properties in Australia were offered for rent in July, a very low percentage given the rise in demand for rentals brought on by migration and population expansion, particularly in the country’s major metropolitan cities.

11. Additionally, the scarcity of reasonably priced rentals is driving out residents who have grown up in the smaller tourist towns, which are being particularly hard hit.

12. According to the research, “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.

13. For residents, this may entail leaving the neighbourhoods where they were raised and where their friends and relatives still live.

14. Since the epidemic began, the median weekly rent for long-term rentals has increased by 45%; in other places, such as Perth and Regional Queensland, the increase is significantly greater.

15. If owners profit more from short-term rental websites like Airbnb, short-term rentals will continue to add to the lack of available properties for long-term tenants.

16. To force more homes to be placed on the long-term market, the report’s author proposed limiting the quantity of short-term properties through a licensing system.

17. While some authorities have limited the number of days a property can be listed for short-term rentals and imposed annual fees for short-term rentals, none of these measures have sufficiently discouraged investors from increasing the number of long-term rentals.

18. The greatest solution is to construct additional rental properties for the long-term market, such as build-to-rent developments where long-term leases are the standard, even though a combination of these strategies could marginally lower the number of short-term rentals available.

Housing Affordability: The Domino Effect, Regulatory Responses and Their Impact

1. When long-term rentals are turned into short-term lodging, a domino effect occurs.

2. Because there are fewer homes available for long-term leasing when every house is converted to a short-term rental, rental prices rise.

3. As a result of increased demand and inflated property prices, investors are increasingly buying residences to list them on platforms for short-term rentals.

4. Social injustices are exacerbated as low- and middle-income families are forced to live on the outskirts of the city, distant from employment and necessary amenities, as housing gets more expensive.

5. Australian cities, notably Perth, have proposed or put into effect short-term renting rules to solve these problems. These actions consist of:

• Owners are encouraged to think about long-term leases when the number of days that a property can be rented for a short period is limited.
• In addition to ensuring accountability, requiring property owners to register their short-term rentals aids local governments in tracking the effect on the housing stock.
• By allocating specific locations for short-term rentals, residential neighbourhoods are shielded from excessive tourism.

6. Even though these rules are meant to be balanced, it is nevertheless difficult to police them, especially in large cities like Perth.

Let’s Delve into Some Real-Life Examples and Market Analysis

1. The Situation of Short-Term Rentals in Perth

• Recent research from the Australian Housing and Urban Research Institute (AHURI) indicates that the number of short-term rental listings in Perth has significantly increased, with an estimated 7,500 units currently listed on websites such as Airbnb.
• Popular areas that are close to the seaside and popular tourist destinations, such as Scarborough, Cottesloe, and Fremantle, have become hotspots.
• For example, about 12% of rental houses in Fremantle are classified as short-term lodging. Long-term rental availability has significantly decreased as a result, with local vacancy rates falling to less than 1%, below the 1.3% citywide average.
• The increased competition for rental properties has driven up average weekly rents, which have risen by 15% in these suburbs over the past two years.

2. Effects on Local Citizens

• According to a survey by the Real Estate Institute of Western Australia (REIWA), the typical weekly rental price in Perth rose from $430 in 2021 to $550 in 2024.
• The rise in popularity of short-term rentals, especially in tourist-heavy areas, is partially to blame for this increase.
• A major demographic change is occurring as locals, particularly those in lower-income groups, are being priced out of neighbourhoods where they have resided for many years.

3. Case Study: Margaret River vs. Perth City

• While Margaret River, a renowned wine region south of Perth, has long been a magnet for short-term rentals, Perth City itself is increasingly seeing similar trends.
• In the CBD and surrounding suburbs like Subiaco and Leederville, short-term rental platforms have transformed older apartment buildings into quasi-hotels.
• Investors prioritize these properties due to their high returns during peak tourist seasons, often achieving occupancy rates of over 80% compared to long-term rental averages of 65%.

Bargoti Real Estate’s Insights and Recommendations

Bargoti Real Estate, a trusted name in the Australian real estate industry, stresses the significance of striking a balance between financial prospects and the welfare of the community. The following suggestions will help alleviate the challenge of home affordability:

• Investors should think about the long-term advantages of keeping properties for long-term rentals to support sustainable communities.

• Affordable housing developments must be given top priority by governments and developers to provide a range of ownership and rental options for people of all income levels.

• Authorities can ensure compliance with legislation by tracking short-term rental activity with the aid of sophisticated monitoring systems.

• To guarantee that housing policies represent the requirements of the community, include locals in decision-making processes.

Looking Ahead

The allure of short-term rentals is undeniable, but their impact on housing affordability cannot be overlooked. As Perth and other Australian cities navigate this complex landscape, collaboration among governments, property owners, and real estate experts like Bargoti is essential. By prioritizing sustainable solutions, we can ensure that short-term rental trends do not come at the expense of housing affordability.

For those looking to invest responsibly or find affordable housing options in Perth, Bargoti Real Estate is here to guide you every step of the way. Together, we can build a future where tourism and housing needs coexist harmoniously.

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