Debate over home stays just hot air

Housing affordability is a complex issue with no easy answer, says Brent Thomas

WRITER H.L. Mencken famously said that “for every complex problem there is an answer that is clear, simple, and wrong”.

So it seems in the debate around housing affordability. Some people are now claiming that Tasmania’s housing affordability crisis is the fault of home sharing generally, and Airbnb specifically.

Airbnb’s growth in Australia has been remarkable. Australians have overwhelmingly embraced home sharing. But of course, Airbnb’s rise has not been without a cost. Airbnb has become the goto scapegoat for all manner of public policy concerns, including the cardinal Australian sin of making homes more expensive.

As we have seen overseas, the debate on Airbnb’s potential impact on housing affordability has not been grounded in the facts but in perceptions or anecdotes. Some people have jumped on the bandwagon, throwing out misleading and premature statements which masquerade as conclusions.

Blaming Airbnb for housing unaffordability is as absurd as blaming smashed avocados — it just doesn’t stack up. First, as any Australian would know, expensive housing is not a new problem. The problem was around long before Airbnb.

Secondly, housing affordability is in Airbnb’s very DNA. The community was founded during the global financial crisis by three millennials trying to pay their rent. With wage growth in the gutter and the cost of living sky high, home sharing makes housing more affordable. For many hosts, who earn on average just $4842 a year, Airbnb is an economic lifeline. What’s more, it frees up latent or underutilised capacity in the housing market by allowing people to use the one or more unused rooms in their home.

Thirdly, Airbnb is not a significant factor in the local housing market. Airbnb represents roughly 1 per cent of the total housing market in Australia. In Tasmania, Airbnb listings represent a tiny fraction — around 1.7 per cent — of the total housing market. The latest Census data shows there are 12 times or 28,000 more empty homes in Tasmania than are Airbnb listings. There are 10 times more empty homes in Hobart than there are Airbnbs in Hobart.

Fourthly, focusing on the number of listings alone is telling half the story. The vast majority of Airbnb hosts in Australia list their primary residence — the home they live in — for an average of just 30 nights a year. That’s not a home being taken off the market. It is everyday people using their home to make a little extra money.

Finally, independent research from at home and overseas has found no material link between Airbnb and worsening housing affordability. For all the hype, Airbnb is not making homes or rents more expensive.

The NSW Tenants Union found Airbnb had had no discernible impact on vacancy rates, and that there is no link between Airbnb and increases in rent. An ECONorthwest 2016 report on Airbnb’s impact of housing affordability in the US city of Portland found Airbnb had “minimal, if any, impact on the current affordability crisis”.

Housing affordability is a complex public policy problem. Any mature and prudent debate must look at the real drivers of affordability. The biggest levers at the disposal of government, the policies that will make the biggest impact, remain things like negative gearing, the tax system, the planning system and population. As such, we should beware of anyone spruiking clear and simple answers.