The increasingly popular trend of short-term letting is having an impact on some of Sydney’s visitor and investor favourites, and local auctioneers are seeing a considered change in market behaviours.
Auctioneer James Pratt of James Pratt Auctions is a long-time resident of Bondi Beach, and with eyes-on-the-ground experience, explained that he has seen Airbnb raise property prices.
“You can imagine the scenario of obviously someone who’s got a two-bedroom apartment here and is able to Airbnb it over the summer,” Mr Pratt said to Smart Property Investment.
“The profit they’re able to generate through two months of summer for an investment point of view only increases the sale price.
“So, from a property price, it’s being very good on that level.”
However, this means investors trying to enter the Bondi market area are facing a much higher entry point.
Peter Koulizos, property lecturer and chairman of the Property Investment Professionals of Australia said the Airbnb effect property was only inevitable stating that “there is only so much you can do in a free market”.
As a result of this “free market” residents in tourism hotspots should also expect rises in rent, he said.
“You just have to expect that places where lots of people want to stay, whether it’s short-term or long-term, there are going to be restrictions and you’re going to need to pay a higher rent,” Mr Koulizos said.
“Whether you’re paying it based on the amount of people that want to stay there long-term or whether they’re paying it based on the amount of people that want to stay there short-term, now people in Bondi are going to pay a high rent for exactly the same property compared to people in Rooty Hill.”
He agreed with Mr Pratt’s sentiments of the profitability of Airbnb, stating turning a property into a short-term rental is “a relatively quick and easy way to generate income”.
“I mean, you’ve got the issue of furniture and all the furnishings to worry about, but it’s certainly has put a different perspective on not just investment property but people with their own homes, even moving out for the weekend or a week in the summer time for people to use it and they go somewhere else, have their own cheaper holiday,” he said.
The profitability is particularly appealing to Mr Koulizos, as he is currently in the process of building properties in Noarlunga South, and plans to make one of the properties serviceable through Airbnb.
Previously, the Australian Housing and Urban Research Institute claimed Airbnb has an influence on the Australian property market, according to the Technnological Disruption in Private Housing Markets: The Case of Airbnb report. Airbnb responded to these claims, stating they were “deeply flawed” according to a spokesperson for Airbnb in a statement provided to Smart Property Investment.
“As the researchers themselves identified but chose to ignore, Airbnb is simply not a primary factor in the housing market,” the statement read.
“The Airbnb community represents less than one per cent of the Sydney and Melbourne housing markets.
“Holding less than one per cent of the market responsible just isn’t credible, and more seriously distracts from the big causes, like the planning system, population growth and taxation.”
Sasha Karen, Smart Property Investment, 14 November 2018