Canberra’s short-term rentals more than double in a year

The ACT had the largest increase in short-term rentals in the past year compared to all other Australian jurisdictions, according to a new report from the Real Estate Institute (REI).

Rentals for short periods, such as those through companies like Airbnb, increased by 66 per cent in the year to March. By then, there were 1,133 short-stay rentals in the capital.

Belconnen in Canberra’s north saw the biggest leap, with an increase of 145.8 per cent, and the inner-city suburb of Reid had the second-highest, with a 100 per cent increase.

In Braddon near Canberra’s CBD, the annual change was 72.4 per cent, while in the inner-north suburb of Lyneham it was 83.3 per cent.

In releasing the data, REI president Hayden Groves said the past 12 months had been the “year of the rental market and not in a good way”.

“Vacancy rates in all our major cities and regions remain at critical lows,” he said.

“On one hand, [short-stay accommodation] has been an essential part of meeting the high demand for domestic tourism accommodation. At the same time, it has come under fire for eating into long-term rental housing and being a driving factor behind the rental crisis.”

Rental caps driving landlords to Airbnb: REI chief

Hands on a laptop keyboard. The screen is open to an Airbnb search.
Canberra’s Airbnb market is surging as the rental vacancy rate remains low.(Pexels: Cottonbro Studios)

ACT Greens leader Shane Rattenbury said the sharp uptick in short-term rentals was a “problem”.

“I think it’s a problem because what it does is it displaces long-term rentals,” he said.

“So we need to look more closely … it is an emerging issue, it is an issue that is emerging across the country.”

Mr Rattenbury said one contributing factor for the national capital was the high number of workers who only spend part of the year in Canberra, including those who work at parliament.

“I think Canberra is a particular market, I reckon people are trying to capitalise on things like parliamentary sitting cycles,” he said.

Real Estate Institute ACT chief executive Maria Edwards said the increase came from a combination of new builds and long-term rentals switching to short-term. 

“If you look at the suburbs that have increased, it’s definitely places that have a lot more apartments,” Ms Edwards said.

“So there could be apartments that have been built where investors have built specifically for Airbnb.

“[Otherwise it] could be, with the prices of rents dropping in the ACT, that long-term landlords have switched across to short-term rentals to try and, I guess, recoup some funds because interest rates have been going up as well.”

A smartphone with an Airbnb logo on it in front of the same logo being projected on a screen.  
Real Estate Institute ACT chief executive Maria Edwards says landlords may have switched to short-term rentals due to interest rate rises.(Reuters: Dado Ruvic)

She also speculated that the end of the pandemic might have motivated more people to make the switch to short-stay rentals as travel opened up once more.

Ms Edwards said there was a stark difference in the income from a short-term rental and the average rental lease.

“Generally you can make the same amount in around about 150 days of a short-term rental than you would in a whole year of having it on the long-term market,” she said.

“But you do have to take into account that [on a short-term rental] you’re paying the electricity, all the utilities on the property, supplying internet etc.”

While there might be hidden costs to running a short-stay property, Ms Edwards said there was obviously something driving people to make the switch across.

She said she believed the ACT government’s legislation, introduced to better protect renters from price increases, had caused the dramatic surge in short-term rentals.

The ACT is the only jurisdiction that puts a cap on rent increases and they are limited to no more than 10 per cent above the Consumer Price Index for Canberra.

“Obviously in the ACT we have rental caps, so with interest rates going up you can’t increase your rent for a long-term tenant to cover those increases, so short-term, there’s a bit more flexibility there,” she said.

“The sales market itself has been flat as well, so just because people can’t recoup their costs on the rental market, they can’t just go and sell their property either, but there is the opportunity to switch to short-term rentals.”

Rental market is protecting renters: Greens MLA

Johnathan Davis speaks to the media.
ACT Greens MLA Johnathan Davis says he believes Airbnb needs to be more tightly regulated.(ABC News: Ian Cutmore)

Opinions are divided on whether government action is required to intervene and control the number of short-term rentals in the Canberra market.

Ms Edwards said she believed it was a “wait and see” situation and that intervention could only worsen the problem.

“If everybody floods the market with Airbnbs … the returns for what you’re going to get for them is going to go down, so I think with no intervention things will be OK,” she said.

But ACT Greens MLA Johnathan Davis, who has previously called for a cap on short-term accommodation in the capital, called the surge “concerning”.

He said Airbnbs were stopping Canberrans from finding affordable rentals.

“There are 1,133 properties, according to this report, that have been ripped from our long-term market and placed in the… unregulated hotel market,” he said.

“Were all of those properties to come back to the long-term market tomorrow, our vacancy rate would double to nearly three per cent, which many experts suggest is a healthy rental market.”

Blue 'rent' sign outside apartment block.
Canberra’s rental market has long been one of the most expensive in the country.(ABC News: Markus Mannheim)

Mr Davis said Australia was in the midst of an “inequality crisis”.

“I just can’t fathom how we think it’s appropriate to see more homes, properties in residential zoned areas … going into this unregulated market, competing with hotels that work really hard to meet their tax and social obligations to run hotels,” he said.

Mr Davis said he did not know what the best solution was for Canberra, but referenced other places that had introduced laws to try to limit the number of short-term rentals, including Byron Bay and Brisbane.

“I have a pretty philosophical view about this that if you buy a home in a residential area it should be provided to the market as a home, not a hotel,” he said.

Ms Davis said the sharp increase showed the long-term rental market was being “appropriately” regulated.

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