Will influx of tourists see Airbnbs Swamp rentals?
Fears are growing that the reopening of New Zealand’s borders could lead to landlords taking their properties away from long-term tenants. Miriam Bell reports.
Short-term rental platforms, such as Airbnb, are accused of contributing to housing shortages and driving up rents in cities around the world.
In Wellington, advocates say a crackdown on unregulated Airbnb-style accommodation could free up hundreds of homes for the under-pressure rental market.
But the prospect of making extra cash by providing Airbnbstyle accommodation is attractive to many property owners, particularly given the rising cost of living.
In the years before the pandemic, there were huge increases in the number of properties put up for short-term rental in holiday towns such as Queenstown, Rotorua, Taupo¯ and Mt Maunganui.
Paul Hibbett, from Harcourts Queenstown, says this depleted the traditional rental pool, contributed to a big hike in rents, and put local tenants under pressure in these areas.
‘‘It left Queenstown’s rental market in a crisis. Pre-Covid, we had the highest rents in the country, and many people looking to make a quick buck were really milking the situation.’’
When Covid hit, it knocked the wind out of their sails, and many returned to the traditional market, which allowed the market to rebalance, he says.
According to AirDNA, which monitors the supply of holiday rentals, this July there were about 1680 active Airbnb listings in Queenstown, and of these 1535 were for ‘‘entire homes’’ rather than sleepouts or rooms. That is down by 8%, from 1820, at the same time in 2019.
Hibbett says the rental market is still ‘‘all over the place’’ as it is very seasonally driven, and supply always gets tighter around the ski season.
With the borders open again, Queenstown has just had its busiest few months in two years, and that was likely to tempt some landlords back to the shortterm market, he says.
‘‘But there are some differences now. Pre-Covid there was a massive lack of houses here generally, and since then we’ve had some big residential subdivisions built.
‘‘Changes to tenancy law mean a landlord can’t just get rid of a sitting tenant to put their property on Airbnb any more. They have to wait until the tenancy ends before they can do that.’’
The Queenstown Lakes District Council also now requires property owners to have a resource consent to provide short-term rentals. The exception is properties in highdensity zones which are not rented out for more than 90 days.
It is not known how vigorously the council polices this, Hibbett says. ‘‘But spot checks are done, and people have received letters from council saying they have noticed their property on Airbnb, and it is not registered.’’
Mt Maunganui’s market was also distorted by shortterm rentals in preCovid days. David Hart, from Ray White Bayfair, says a lot of landlords shifted their properties to the short-term market, and it had a negative impact on long-term rental supply.
‘‘Then Covid hit, and it decimated the short-term rental market here overnight. Many landlords moved their properties off Airbnb, as there was more security in the long-term market, and many still view it that way.’’
AirDNA does not have figures for Mt Maunganui alone, but there were 1182 active Airbnb listings, of which 978 were ‘‘entire houses’’, in Tauranga city in July. That figure was down by 9% from 1294 in July 2019.
Hart says Mt Maunganui has been through a period of scarce rental supply, although that seems to be easing now.
‘‘I haven’t seen a creep of rentals back on to Airbnb, despite the borders reopening. Who knows what summer, which is traditionally a busier time, could bring, but people still aren’t certain of what lies ahead.’’
Long-term rentals are less volatile, and the new tenancy laws make it harder to change from them, he says. ‘‘We may not see the same number of landlords moving from longterm to short-term as people expect, or as we have had in the past.’’
While AirDNA figures show the supply of short-term rentals has declined in popular holiday spots, the short-term supply has fallen the most in Auckland .
In July there were 4406 active Airbnb listings in the Auckland region, and 2880 of them were ‘‘entire houses’’.
But in July 2019, there were 7530 active listings, with 4563 for ‘‘entire houses’’. That is a decline of 41% in total listings, and of 34% in ‘‘entire houses’’.
Propertyscouts director Ryan Weir says that when the borders closed and tourists and international students left, demand for short-term rentals plummeted.
Many landlords returned their rentals to the long-term market and that, plus the city’s building boom, has increased rental supply and contributed to the recent easing of rents and
market pressures in Auckland, he says.
‘‘I had five rentals on Airbnb, but when Covid hit, I changed them all back to the long-term market, and I’m not planning to use them as short-term rentals any time soon.’’
Despite the borders reopening, he does not believe it is a financially viable option yet as prices are still not what they used to be.
But landlords who have been hit with interest rate rises and the loss of mortgage interest deductibility may now look to bolster their cashflow via a move to short-term rentals, he says.
‘‘They can be lucrative, but they are not for the faint-hearted. Many people have tried Airbnb only to return to traditional tenancies because they require a lot less time, work, and hassle.
Many of his clients plan to keep their former short-term rentals in the long-term pool, even once tourism is back to preCovid level, he says. ‘‘They have become accustomed to getting passive income and being free of the operational duties of running a short-term rental.’’
For Apartment Specialists director Andrew Murray, there is no doubt the pre-Covid Airbnb boom took properties out of the traditional rental market, and changed the dynamics of supply and demand.
When there is a more limited supply of long-term rental properties it puts upward pressure on rents, so the more properties are up for short-term rental, the more the long-term market is impacted, he says.
‘‘But the effects are very localised as not all properties and locations are right for shortterm rentals. In Auckland, the bulk of short-term rentals are in the wider CBD area and on Waiheke Island. That’s why the CBD apartment market has struggled since Covid hit.’’
He does not believe there will be a surge of landlords putting their rentals back on to Airbnb.
‘‘No-one knows when tourism is going to return to pre-Covid levels. Demand might be picking up a bit, but everything costs more now, and that will hold people back a bit.
‘‘The short-term rental market will ramp up again eventually, but I don’t see it getting above 40% of pre-Covid levels until around 2024, and then there may be some movement of rental stock.’’
Meanwhile, Airbnb’s Susan Wheeldon says contrasting the number of short-term rental listings against the number of vacant rental properties creates a distorted view of the market.
‘‘It may imply that the only transfer of long-term rentals is to short-term accommodation, and not through rental demand driven by population movements, or increasingly lessdense households.’’
It is also important to note that ‘‘entire home’’ listings are not necessarily homes that would be put into the long-term rental market, she says. ‘‘An ‘entire home’ can be a selfcontained section of a property that is still a primary residence. Or it may be the owner’s primary residence, which they have listed while they are travelling to offset the cost of their holiday.’’
‘Short-term rentals can be lucrative, but they are not for the faint-hearted.’ RYAN WEIR, PROPERTYSCOUTS DIRECTOR