Sydney Tourism Slump a Boon for Renters in former Airbnb Hotspots

Written By: Caitlin Fitzsimmons, The Syndey Morning Herald, 13 June 2021

Sydney renters in the inner city, eastern suburbs and northern beaches have reaped the benefits of a slump in the holiday rental market during the pandemic, as Airbnb landlords converted their properties to traditional long-term lettings.

Researchers at the City Futures Research Centre at the University of NSW found the suburbs in Sydney with the greatest Airbnb activity before the COVID-19 pandemic also experienced the biggest drops in typical weekly rents during 2020.

The 19 Airbnb hotspots, which included Bondi, Avalon, Manly, Darlinghurst, Surry Hills and Redfern, saw the typical weekly rent fall an average 7.1 per cent from June 2019 to April 2021.

Christopher Pettit, a professor of urban science, and postgraduate researcher William Thackway, based their analysis on AirDNA and APM data. They also found rents remained stable throughout 2020 in Sydney suburbs with historically low Airbnb activity.

“It’s a good opportunity for those renters wanting a home,” Professor Pettit said. “But we were seeing a growing dependency on Airbnb as a second income to pay the mortgage, so these hotspot suburbs could also be more susceptible to mortgage stress.”

Beachside suburb rents have started to bounce back this year, while inner city suburbs remained depressed. Avalon’s median rent grew 23.5 per cent in the nine months to April, while nearby Newport jumped 9.2 per cent. Rents also recovered or surpassed pre-pandemic highs in Manly and nearby suburbs of Fairlight, Freshwater, Queenscliff and Curl Curl.

Rents in eastern beachside suburb such as Bondi, Bronte and Coogee have started to recover but are still lower than before the pandemic.

Meanwhile, rents have declined for the second year in a row for inner-city suburbs, such as Elizabeth Bay, Potts Point, Darlinghurst, Surry Hills, Redfern, Chippendale, Newtown and Ultimo. The biggest fall is in Paddington, where median rent has declined 23.1 per cent since June 2019.

In April, NSW Planning Minister Rob Stokes introduced a State Environmental Planning Policy for short-term rentals such as Airbnb or Stayz, which overturns any blanket bans on short-term rentals at council level.

“This policy is about striking the right balance between providing safety and certainty to homeowners and the traditional accommodation sector, while giving the community access to the benefits of the share economy,” Mr Stokes said.

“Having a permissive regulatory system also means that more people can stay in more places, creating more opportunities for jobs and tourism closer to home.”

The new rules, which come into effect in November, state that in Greater Sydney homeowners are permitted to offer short-term accommodation for 180 days a year if it is “unhosted” – meaning the landlords are not present on the property. There are no limits if it is “hosted”, such as a granny flat on the same property as the homeowner. The policy does not override the conditions of a development approval, so some buildings will remain closed to short-term letting.

Regional councils can opt into the SEPP or allow more short-term rentals, but not less. The exception is Byron Shire Council, which is grappling with a housing shortage and has submitted a planning proposal to cap short-term rentals at 90 days a year.

Alex Greenwich, the state MP for Sydney, which includes suburbs such as Paddington and Surry Hills, said he would work with apartment communities and tenancy advocates to push for stronger laws to prevent residential homes being turned into short-term holiday accommodation.

“I have been saying for years that without appropriate controls, short-term letting can seriously erode housing affordability,” Mr Greenwich said.

“The reprieve for renters is short-lived and when the tourists return, there is nothing to stop homes being converted back into hotels and rents skyrocketing again, pricing residents out of their neighbourhood.”

Trish Burt, the convenor of Neighbours not Strangers, a lobby group opposed to short-term letting in residential homes, said rents had fallen up to 25 per cent in the Sydney CBD where she lives, including one building where dozens of apartments had converted from short to long-term letting at the same time.

“It’s opened up the possibility of essential workers, such as nurses and hospitality staff, moving in,” Ms Burt said.

“It most definitely decreases the amount of income that investors are earning, but they are still able to earn what is basically the primary use of that property, which is rental return for residential occupation.”