The property market in Australia is currently on a knife-edge. According to an article in the Australian Financial Review titled, "House Prices Fall 4.9% for the Year", 12 interest rate rises have had a severe impact on the overall property market.
Alarmingly, due to increasing supply and demand problems, property prices have actually increased in some major cities by an average of 3.3% in the last quarter of the financial year ending on June 30th, according to CoreLogic.
As a result, property prices could easily fluctuate in either direction in the next two financial quarters in 2023. This precarious situation could set the stage for a property market crash. If unnecessary and restrictive regulations were to be imposed by extremist politicians on property investors and the short-term rental market, this could exacerbate the existing supply and demand issues.
In particular, if the anti-Airbnb agenda were to result in regulations that would make owning a holiday home available for rent unviable for most people, we could see a mass sell-off of these holiday properties.
The problems with supply and demand are exemplified in the performance of the Sydney property market in the last quarter of the financial year, where prices rose by 4.9%, contrasting with the overall downward trend.
These price increases were likely caused by low levels of listings and a higher-than-average level of demand. These points are being ignored by the anti-Airbnb agenda.
If further proposed radical restrictions on short rentals and property investors were to be implemented by federal and state governments, as well as regional councils, this overall negative situation would be compounded, potentially leading to further property price drops.
What suburbs and regions in Sydney and NSW would be most affected by the sale of thousands of short-term rentals and investment properties?
To get a clear picture of which areas would be hardest hit, we need to debunk the "Airbnb is causing the rental crisis" myth. Most short-term rental properties are in areas that are very popular with tourists, which are usually middle to upper-middle-class suburbs or regional areas. We are likely to find Airbnb properties in CBDs, wine regions, alongside beaches, close to sporting venues, entertainment facilities, or anywhere else that there are tourist attractions.
We are unlikely to find Airbnb properties in working-family suburbs that are close to factories, large warehouses or storage facilities, or depots. Obviously, these are suburbs or regions that are attractive to working families, especially migrants, because they are where the available jobs are. This means the demand for rental properties is highest where there are the fewest numbers of short-term rentals.
Therefore, the forced sale of short-term rentals will not benefit most working families looking for a rental property. The solution to the rental crisis is for federal, state, and local councils to provide adequate new housing options and to incentivise property developers, not unfairly penalise them.
For those with a short or medium-term rental property in vulnerable suburbs or regions, we do provide an advocacy service through Sustainable Housing Services.
