Tourists renting Airbnbs and “swamping” communities can drive out local residents and drive up apartment rents, and a new study argues zoning rules could be used to lessen the impact of the sharing economy platform.
The study, by Auckland University business school Senior Lecturer in Property William Cheung and Associate Professor Edward Yiu, found Airbnb listings help to increase rents in areas with lots of apartments such as in a central city area, but Airbnb rentals can reduce residential rental prices in low-density, house-dominated neighbourhoods.
The impact of short-term Airbnb rentals is much more problematic in residential neighbourhoods, Cheung said.
“In low-density residential neighbourhoods locals are more likely to notice strangers or increases in noise, and their area may not have the resources to cater to influxes of visitors. When visitors begin to swamp a community, local residents will be less willing to pay rent for that location and will move elsewhere.”
The researchers say designated zoning could give cities, including Auckland, flexibility to supply tourism accommodation while “avoiding creating severe urban conflicts in low-density suburbs.”
Cheung said having zoning for where Airbnbs can operate could take into account whether there is appropriate infrastructure in the area, for example.
A previous study found that destination management models overlook the role urban zoning could play in managing tourism.
Instead, a "novel zoning approach" could cover the needs of short-term accommodation options like Airbnb, and of permanent commercial hotels.
Using zoning to decide where short-term accommodation can operate could gear up the tourism sector to cope with the rapid growth of the sharing economy, and align with sustainable tourism to ensure long-term socio-economic benefits to stakeholders, the study said.
Cheung said tourists will pay higher rents for convenience, and in high-density inner city areas, rents will be higher as visitors compete with people who would like to live in the city centre in order to enjoy better accessibility.
The study found an influx of tourists into an area may cause services, facilities and shops to be reoriented towards tourists’ preferences rather than residents.
The study calls this process “touristification”. The researchers found that along with these changes, noise and overcrowding are a drawback from the tourists that come hand-in-hand with Airbnb-style accommodation.
When visitors swamp a community, residents are less willing to pay rent to live there and will move, the study says.
The new research is part of a series of studies Cheung is undertaking which will look at touristification.
His next study will look into how touristification affects retail.
The pressure that short-term rentals like Airbnbs places on housing availability has caused angst.
In Wellington advocates are calling for a “crackdown” on Airbnbs, and for Airbnb listings to be levied with the same rates that other accommodation providers face.
Earlier this year, the Christchurch City Council decided Airbnbs would need a consent to operate. The cost of such a consent is estimated to be more than $1000.
Airbnb called the rules “most restrictive and outdated home sharing laws in Australasia”.
Chueng said consenting changes like those in Christchurch won't determine where Airbnbs can operate, whereas zoning laws could.
Airbnb is also under scrutiny with Government plans to force the accommodation platform, and Uber, to levy GST on bookings.
At the moment Uber drivers or Airbnb hosts have to pay GST themselves.
A 2018 Deloitte report for Airbnb found Airbnb guests make a significant contribution to New Zealand’s economy, contributing $660 million in GDP and supporting over 6,000 jobs.
Airbnb has been contacted for comment.
- You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
36 Comments
Wow. Amazing only that they too this long to work this out. Queenstown is the worst example of this. Mass absentee owners, who either don't rent, or are using AirBnB to avoid the RTA and leave the house free for the 2-3 weeks a year they want it themselves. This kills the local rental market, so that the local cafe worker, chefs, cleaners etc cannot live locally. Go the figure that Queenstown business owners are screaming out for staff.
Same thing happened in Aspen in the US. It changed its zoning to provide development land for full time local residents to have cheaper housing to live in. Same thing will have to happen here, or more and more parts of NZ will be Ghost towns but for 2-3 weeks a year, moaning that all the cafes and local businesses are closed.
I lived in Vail a long time ago. First accommodation was a couch in a condo. About 20-min bus ride to central Vail. Moved to another couch that was in a much bigger place but was 5 mins bus ride to the center. If you were a head barman in the 90s, you were potentially making close to USD10k or over per month, depending on the establishment. The company that runs the ski resort had accommodation for their workers. Actually, prime location and walking distance to lifts. Lowish wages but that was to be expected. People there for the powder adn terrain. Lower income workers tended to live in another area.
Mayor of Queenstown and Stuart Nash - Basically said it ONLY wanted rich tourists big bucks hotels and expensive air b an b --- drove out camper vans, tourists and motorhomes and backpackers-- now cant staff its businesses or house the workers it needs --
You reap what you sow- and as a Motorhomer who now never ever goes there -- everytime i hear an article on the news about it i give a silent cheer and laugh my arse off! Plenty of amazing places in NZ to spend my money in !
I also take Woofers - hoping for them all to come back again as i miss them - and many say they avoid queenstown as they have to stay 50 km away and commute each day in their vans to go work -- adn with heaps of work everywhere - and many employers in fruit/ agri etc also providing hard standing free with showers and cookign facilities - its does not figure on their go ther to work lists!
Owners of holiday homes are never going to be renting the place to long term tenants, that would defeat the purpose of having a holiday home. By renting it on AirBnB at least that property is not sitting empty 80-90% of the year, and the people who get to occupy it are contributing to the economic prosperity of the area. Or would you rather a ghost town of empty houses except for a few weeks during ski season and the New Year? Without the tourists, there would be no jobs for the workers, and without jobs there would be no need for worker accommodation because there would be no workers.
I think you are putting the cart before the horse. You are assuming that the homes being rented on Air BnB were originally bought to be holiday homes, and therefore would otherwise be empty most of the time. But a lot of people who can't afford a holiday home can afford an Air BnB which they occasionally use themselves, thus increasing the amount of homes that would otherwise be owner occupied or long term rentals instead being short term lets.
Of course both of you are right. For some their property would just sit empty if not for air bnb and for others they would never have bought their holiday home if not for the income air bnb could provide. This also goes for new builds, so you could say air bnb is having a positive effect on the overall housing stock.
Also so many of the young that have built there have only been able afford to build because they tag on a air bnb and the income this provides. Once built many then claim that this shouldn't be on air bnb and is just taking away permanent rental stock oblivious to the fact that it would never have been built in the first place as a long term rental. Of course in some situations the tag on flat would have been build as a long term rental.
The truth is, its really complicated and very few want to acknowledge and try to understand the complexity.
This is a big issue in Australia (trigger warning for those heading over there) with Councils pleading owners to take their homes out of AirBNB and rent to locals, particularly a problem in lifestyle hotspots.
You declare war on landlords, remove interest deductibility, increase tenants rights and then moan when landlords act logically and opt out. As a rough rule of thumb, you can make the same in 4 to 6 months Air BNB as a fulltime rental to a local. So, why in god's name would the owner rent to a local??? I don't AirBNB yet but I'm very close.
https://www.msn.com/en-au/money/markets/holiday-home-owners-refuse-buss…
- Thailand has surcharges on Airbnb rentals. Hotels can be better value for money.
- Japan introduced heavy restrictions on Airbnb. Was crazy for a while. Business trips to Osaka from 2015-18 I would stay in a downtown apartment for NZD50 per night. Usually would come with free pocket wifi, saving NZD15-20 per day.
What possible basis is there for a surcharge? Councils should focus on fixing a problem they are largely the author of - zoning and planning.
Tourism is an important sector for Thailand. The govt wants people to stay in hotels, backpacker lodges, etc. The surcharge is a disincentive for people to stay in Airbnb.
Similarly in Japan, the Japanese govt didn't want people staying in private accomodation for quite a number of reasons.
"Undercutting local hotels" - so what ? Theres an internal logic fallacy in your comment. Even if they're below the legal threshold for GST theres no evidence that they're not paying their due taxes. Market disruption to consumers benefit doesn't require rorting penalties to make hotel business more profitable.
Thanks TK, that is it in a nutshell. Not just Air BnB, https://www.urbanbutler.com/ for example, these guys are doing great business as we are having to fly in Dr's etc.
Suits us down to the ground for one of our apartments you should give them a serious look.
I rent through Airbnb Te Kooti, it's wonderful! I have been buying baches in the most beautiful spots in NZ, rent them out through Airbnb, I get much more income than through tenancies without all the hassles, and then I get to holiday there myself from time to time. Do it, it's awesome!
You declare war on landlords, remove interest deductibility, increase tenants rights
Wow, quite the victim complex there.
Meanwhile, what's happening to rents in the Hutt area?
AirBnB is commercial use. Commercial rates should then apply.
There's a few of those Williams Corp-style townhouses that have gone up near my place in Chch and every single one of them seems to have a lockbox setup for AirBnB, with people coming and going with their suitcases every few days.
Most places I go these days I find I can get a better deal booking a legitimate hotel/motel through Booking.com, and the standards of cleanliness and service are typically better.
Williams Corp deliberately pitched their properties at AirBnB investors. This is because the places are so small, they are only fit for occupancy by temporary guests, as well as the long term rental market return on them being very poor as you would be likely cashflow negative - made worse by the fact that now you cant claim interest deductibility on them.
A short term accomodation provider is not in the residential rental business and we should assume that the muppets running the country know what they are doing as they are taking advice from there overbloated ministries.
They have knowingly differentiated between short term accomodation providers and landlords.
This has been done via the tax laws to encourage short term accomodation suppliers like hotels and airBnB, this is done by allowing interest and depreciation deductability on these properties.
The has the effect of discouraging the supply of residential rentals. Don't blame the investors for following the governments lead, after all that's why the government makes these changes to influence behaviour. For the government and councils to complain is a bit rich, you would have to be blind to not see this coming.
An example of how increasing taxes reduces supply.
The link to this article, states that;
More than 800 Airbnb listings are active in Wellington City today. That's fewer than half the number before Covid-19.
So I wonder whether there was a statistically significant increase in permanent rental stock on the market in Welly during our border closure? I don't recall any media reporting that that was the case.
The social problems are that renters can not live close to where they work and the AirBnB renters tend to behave in more anti-social practices than long-term renters. What often happens to our neghbouring AirBnBs is that the renters violate their agreement by having 20+ people staying and then holding a massive party.
This process is called gentrificiation and is as old as money itself.
Look at all those shabby suburbs in AKL or Wellington which have driven the "brown people" out of town and make space for leafy suburbs to rise.
A zoning ban for airbnb is sooo archaic and market distorting thinking, not to mention it violates property owners rights to do what they please with the property they OWN & rent to the person that pays the highest price.
If renters can't afford to pay the same amount it tells you that either wages are too low or there's not enough supply of rentals (they can't be ALL airbnbs as most would end up empty).
Govt could incentivise landlords to provide long term rentals by reducing tax / allowing (partial) interest deductability for long term rentals.
The answer is not to ban economic behaviour as market theory always seeks to optimise supply & demand for the sake of market efficiency. It's the WHOLE POINT of the market to find the best price point for a product/service.
I followed the link above through to: https://www.sciencedirect.com/science/article/abs/pii/S0261517722000802
It is purchased or available via academic institutions.
The abstract states that the research was done in Melbourne on a "revealed preference" methodology.
I couldn't say for sure without the original paper however the article does read a bit like a conclusion in search of a theory.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.