Given the regional tourism boom and the potential for higher financial returns, more property owners in some regional centers are offering their homes for short term vacation rentals rather than renting them out to long term renters.

Important points:

  • There is a mass rent shortage in regional areas across Australia
  • An increase in domestic tourism has been an incentive for owners to offer their properties as short-term rentals
  • Demand for long-term rental properties has seen a $ 100 weekly increase in some regions

In just 15 minutes, Leisa McKinnon’s phone goes off twice: a five-night booking and a three-night booking for her Airbnb accommodation.

“There it goes,” said Ms. McKinnon.

She is used to the “ping” of her phone when guests book her two-bedroom, one-bathroom brick home in the middle of Mount Gambier in southeastern South Australia.

Since joining Airbnb in July 2019, the number of available properties in the city on the short-term rental platform has grown from 88 to over 150.

This story is repeated across Australia, and property owners are choosing to rent their homes on sites like Airbnb rather than listing long-term renters.

While it’s good news for local tourism, real estate professionals say the success of short-term rentals is a catch in Australia’s rental crisis.

Lisa McKinnon’s property is simple but couldn’t be busier with guests. (ABC South East SA: Bec Whetham)

High demand for rental properties in regions

Mount Gambier’s Maddie Provis spent most of her pregnancy applying for rental properties.

After applying for more than 50 rentals for eight months, she and her partner desperately made a public appeal on Facebook.

“I posted the picture of myself and my partner and explained our situation,” said Ms. Provis.

“We were lucky enough to find someone who would be happy to let us.

“I felt a little guilty when there were comments on people who had looked longer than us and started families.”

Maddie Provis searched for rental accommodation for eight months (ABC South East SA: Bec Whetham)

In Mount Gambier, the demand for rental properties is at a record high.

Local real estate agent Jessie Little said it was difficult for agents to turn away perfectly good applicants like Ms. Provis.

“There’s no reason people miss anything, and that’s the hardest thing to deal with,” said Ms. Little.

“It’s not like we can even give feedback … it’s really like we just don’t have enough property.”

An aerial view shows the edge of a large blue lake with a green crest and rows of houses behind it. Mount Gambier, the second largest city in South Australia, continues to grow. (ABC South East SA: Bec Whetham)

The real estate company’s president Adrian Kelly said the rent shortage in the regional areas had worsened since the COVID-19 pandemic broke out.

“That was certain [an issue] Prepandemic and it has only been exacerbated now because of the pandemic, “said Mr Kelly.

“While that wasn’t a surprise to us, we were really surprised by the ferocity of the way it happened.”

A woman stands with a stroller and looks at a large glass window that has properties for sale attached to it. New Mount Gambier family home rental offers attract more than 50 applicants. (ABC South East SA: Bec Whetham)

Regional tourism boom

Mr. Kelly said one of the factors driving the rental shortage is the growth in regional tourism and short-term rental income.

“For every property that is put on the short-term market, it is taken off the long-term market,” he said.

“This obviously affects tenants both locally and those who want to move into the area.”

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Mr Kelly said an owner renting their property for short-term accommodation is often a financial decision.

“Platforms like Airbnb obviously offer a higher return on investment in terms of income,” said Kelly.

“We find that some property owners prefer to go down this route because it helps cover the rising cost of spending – especially things like property tax, which seems to be rising a good five or ten percent every year.”

Airbnb country manager for Australia and New Zealand, Susan Wheeldon, did not comment on the impact of short-term housing on the private rental market, but said the Airbnb hosts are helping the local economy.

Young people drinking by the pool According to Airbnb, the regional hosts are “contributing to the recovery of tourism” following the 2020 COVID-19 travel restrictions. (Unsplash: Eric Nopanen)

“Local hosts on Airbnb are keen to make a huge contribution to the economic recovery of their area by rolling out their welcome mats and bringing tourist funds to the area,” said Ms. Wheeldon.

“People are using Airbnb to find affordable and unique family-friendly getaways where they can spend time with loved ones – especially in places like Mount Gambier, which are just a few minutes’ drive from major cities.”

She said the company was focused on boosting tourism in the country after a “challenging year for everyone”.

“In addition to our host community, we are committed to working with government and industry so we can continue to contribute to the recovery of tourism across Australia,” said Wheeldon.

Increased competition among tenants

In Dunsborough, Western Australia, Anna Barr has to wonder what effect the growth of short-term rental housing is having on her living situation.

She is preparing to move in with her ex-husband after failing to secure accommodation.

Anna Barr After Anna Barr struggles to find an apartment, she moves back in with her ex-husband (ABC South West WA: Georgia Loney).

Ms. Barr competed with another 50 families, all of whom only applied for a handful of homes in town.

Located near Margaret River, Dunsborough has always been popular with tourists, especially during COVID-19.

“If all the tourists hadn’t been down all year round last year, we might have a few more rentals,” said Ms. Barr.

“Nobody is angry with the property owners, it’s just a matter of putting a roof over your children’s heads.”

Big impact on affordability

Real Estate Australia’s chief economist Nerida Conisbee said the shortage of real estate had led to a surge in rental rates.

“Affordability is becoming an issue in some locations,” said Ms. Conisbee.

In Dunsborough, real estate agent Joe White said he was particularly concerned about the lower incomes.

“With rents up a good $ 100 a week, it’s very difficult to reach out to someone vulnerable in this sector and say, ‘Where can you find another $ 100 a week?'” White said .

“There will likely be a welfare problem for six months before the market fixes this.”

Joe White Joe White, Dunsborough real estate agent (ABC South West WA: Georgia Loney)

Ms. Conisbee said the factors causing the rental shortage are unlikely to go away anytime soon.

“I think prices will go up steadily … that will be a characteristic of regional Australia,” she said.

The solution?

Mr Kelly said the short term answer was to build more houses.

“It sounds very simple, but that’s the only thing that can solve the problem and make sure there are enough supplies for everyone,” he said.

“We just haven’t built enough houses across Australia, especially in the regional areas.”

Mount Gambier Housing Estate There is also a construction jam in the housing developments of Mount Gambier. (ABC South East SA: Bec Whetham)

Mr. Kelly realizes that the time and energy involved in building a home may put some investors off.

“It can take up to six to 12 months to even get a shovel in the ground, but you have to start somewhere,” he said.

“If the building process can start today … then it would encourage more people to build these properties as the return would be there in the end.”

Mr Kelly said it would be nice to strike a balance with enough real estate for the short and long term markets in the regional city to meet everyone’s needs.

“But at the moment it is certainly still a long way off,” he said.