The price of Airbnb
The impact on long-term rental availability in Waitaki
Airbnb short-term rental accommodations have been sprouting like weeds in response to regional initiatives attracting people to New Zealand’s Deep South. This includes both in and around the town of Oamaru and in the small towns and villages up the Waitaki Valley that benefit from the flow of visitors by road and bicycle from the Alps 2 Ocean Cycle Trail.
The trail, running from the base of iconic Aoraki Mt Cook to the world’s Steam Punk capital, Oamaru, prior to COVID-19 travel restrictions was fast becoming a tourism hotspot. Picked by Frommer’s Travel Guides as one of the world’s top 16 attractions, the dramatic natural landscapes and ready sightings of some of New Zealand’s rarest wildlife were turning into an economic boon for the Waitaki Valley, with businesses springing up along the trail to support burgeoning visitor numbers.
Airbnb growth in Waitaki, from July 2018 to July 2019, saw the number of short-term rentals rise from 263 to 322. However, this has been followed by a sharp drop off since March 2020, with numbers back down to 282 for June 2020. Building Better Thriving Regions researcher Dr Mike Mackay, an agri-tourism specialist from AgResearch, says we can assume the retreat is linked to the impacts of COVID-19 and the sudden drop in both international and domestic tourists.
Despite COVID-19 impacts, Thriving Regions project lead Associate Professor Malcolm Campbell, from the University of Canterbury, says they are particularly interested in the pre-March 2020 data showing a rapid increase in short-term rentals as he says there are both positive and negative consequences for the settlements involved.
“For example, from the mean rents data for long-term rentals, based on MBIE rental bonds, we can see that the trend is a slow but steady increase in rents over the period January 2016 to January 2020, with the exception of Waitaki in 2016 when rents rose more sharply.
“It is an interesting, now reasonably well-documented, side effect, that the increase in Airbnb accommodation reduces the number of long-term rentals available, this results in rental price increases both from lack of available stock and increased rent price expectations for long-term rentals driven by both competition and higher short-term rental prices.
“Then there is also an impact on housing affordability. Regional profiles examining household income in relation to house prices show all three districts, Ashburton, Timaru, and Waitaki, now have median house prices over three times the household income. This ratio is a marker of housing affordability, or lack thereof, globally. This is in marked contrast to data from 2000/2001 that showed median house prices were less than three times the median family income.”
Malcolm says that around New Zealand, the public housing waiting list has increased markedly since 2016. The most recent figures show a national total of 16,309 people waiting for public housing, with new results imminent.
“For the three districts there is also an increasing trend, however, the detailed picture is a little different. Looking at the breakdown of the number of bedrooms required, indicating the demand for different sizes of house, most demand is for smaller houses of one to two bedrooms. Overall, the increasing number of people in the public housing register both nationally and locally suggests a material deterioration in the ability of housing supply to meet demand.”
Malcolm says the COVID-19 pandemic has created distinct circumstances, making it more difficult to determine rental housing trends going forward given the uncertainty that has been created for the hospitality sector. “There is considerable uncertainty in the data for the period of ‘lockdown’ and the extent to which recent changes are due to the disappearance of international and domestic visitors over this period. This may, or may not, continue for some time for international visitors although domestic tourism appears to be in a period of recovery.”
Research co-author Dr Nick Taylor says the background data into the impacts of short-term rentals is helping guide the Waitaki Housing Task Force in their development of a housing strategy for the area.
Read the research by the BBHTC Thriving Regions research team:
Campbell, M., Taylor, N. & Mackay, M. (2020). Waitaki short and long-term rental. Working paper 20-08b for Building Better Homes, Towns and Cities Thriving Regions, 14pgs. Christchurch: AgResearch/BBHTC.
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Date posted: 8 September 2020