STRA uptake soars as wider housing market struggles

Hayden Groves, president of the REIA, believes the report’s findings have implications for the impact of STRA on the long-term housing market.

“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,” he noted.

While acknowledging STRA serves a purpose within the Australian property ecosystem as “an essential part of meeting high demand for domestic tourism accommodation”, Mr Groves insisted the increased presence of properties on STRA sites “is a driving factor behind the rental crisis”.

For residents on the nation’s east coast, the increased portion of STRA properties is worrying given it’s “where most of the crucial long-term housing is desperately needed”, he said.

According to the report, over eight in 10 (81.9 per cent) of Australian STRA listings are dwellings supposedly capable of seamlessly transitioning between the long-term rental market and short-term rental market.

“Dwellings suitable for long-term rentals increase on short-stay accommodation platforms by 3.7 per cent over the [March] quarter and 26.6 per cent over the past year,” Mr Groves noted.

The financial allures of short-term renting are proving to be a primary reason behind most Australian capital cities having more STRA properties available than long-term rentals, the report found.

In Sydney, it would require just 122 days of successful short-term letting to make the same income as leasing a property for one year on the long-term rental market, based on calculations deducing the gross annual income of a two-bedroom dwelling on the city’s private rental market to be around $33,900.

Similarly, in Melbourne, where the gross annual income on a two-bedroom dwelling is approximately $27,100, it would take just 124 days of STRA leasing to recoup the earnings of a single year on the long-term market.

Earlier this month, the Light as Air: Regulating Short Term Rentals in Australia report by Per Capita’s Centre for Equitable Housing similarly concluded that the financial benefits of short-term holiday leasing far outweigh those of properties on the traditional rental market.

The Mornington Peninsula, a pristine coastal area in the Victorian capital, has the highest number of short-term dwellings (4,347), a decrease of 2.2 per cent from the December quarter but a rise of 20.2 per cent over the 12 months to July.

In Queensland, where 22,371 of the state’s short-term rentals are entire dwellings, just under one-fifth (18.2 per cent) lie in state capital, Brisbane, with the remaining 18,305 located across regional sections of the Sunshine State.

Mr Groves dates the rise of STRA back 15 years to Airbnb’s foundation in San Francisco in 2008.

Since then, not only have more home-sharing sites popped up and “substantially grown”, but Airbnb has cemented themselves as the global market leader as the number of guests jumped from 50 million in 2015 to 800 million last year.

“Of particular interest to real estate agencies may be that short-stay accommodation fees are significant – 15 per cent to 25 per cent – when compared to much lower management service fees for long-term rentals,” Mr Groves said.

The report’s release occurs against a backdrop of consistently dwindling residential vacancy rates and steadily rising rents, with any government solutions far from acting as a quick cure.

“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,” Mr Groves said.

“The report set out to quantify in an objective, fact-based way what the impacts of STRA 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,” he concluded.