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Locals are being out-priced by Airbnb renters

Cashed-up tourists could be forcing locals out as Airbnb provides investors with steady streams of income.

Long-term renters are also impacted, unable to pay the same rates as short-term letters.

Areas like seaside hotspot, Byron Bay are particularly affected, the CEO of RiskWise Property Research, Doron Peleg warned today.

Also read: Mortgage repayments could surge to NEARLY HALF your income

“In areas such as these, and particularly in beachside suburbs, we see the overall demand for properties by investors and owner-occupiers going up,” he said.

“Investors know they can use the property for Airbnb and many put in place leasing contracts that only last 10 months, so they are vacant during summer for the holiday-makers, and this supports the demand for properties.

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“So, when home buyers try to enter the market they are faced with competition from investors which obviously drives prices up.”

It’s not just investors; long-term renters are also more eager to enter the market as they “aren’t keen on moving every few months due to Airbnb”.

A global phenomenon

Byron Bay isn’t the first tourist destination to feel the Airbnb effect.

Also read: Five hacks for a ZERO-COST Christmas

The Barcelona city council has been steadily increasing the number of holiday-let inspectors after growing complaints that local residents were being priced out of their own communities.

The council also fined Airbnb €600,000 (AU$977,500) in 2016 for advertising unlicensed flats.

Berlin went as far as to outlaw short-term rentals in 2016 and imposed heavy fines for hosts who violated it, but has since softened its stance.

And, according to a 2018 study from the US McGill University, Airbnb effectively removed up to 13,500 units of housing from New York City’s long-term rental market. The same study said the median long-term rent as a consequence went up US$380 (AU$538).

Closer to home, New South Wales introduced tough new laws limiting short-term rentals to an accumulative 180 nights a year in the Greater Sydney region.

“Under our ‘two strikes and you’re out’ policy, hosts or guests who commit two serious breaches of the code within two years will be banned for five, and be listed on an exclusion register,” NSW Minister for Better Regulation, Matt Kean said in June.

“These are the toughest laws in the country and will make sure residents are protected while ensuring that hosts who do the right thing are not penalised.”

Also read: Houses are getting cheaper in these regional areas

What can be done?

However, Airbnb rejects responsibility for its purported impact.

Co-founder Joe Gebbia told Australian policy-makers in November last year, “The genie is out of the bottle and it’s not going back in,” the ABC reports.

He said it’s a question of fair and balanced regulation. Airbnb applauded the NSW laws when they were announced this year, describing them as a “watershed moment”.

“With the cost-of-living painfully high, these fair and innovative rules will make it simple and easy for people and working families to share their own homes to make extra income,” Airbnb Australia country manager, Sam McDonagh said.

“The rules will be a boost for the NSW economy and a welcome relief for the countless small, local businesses who rely on the Airbnb guest dollar.”

RiskWise’s Peleg disagreed.

“The effect it has on tourism destinations is extremely detrimental for local tenants and it also impacts hotels and other tourism accommodation in the area as they generally can’t compete,” he said.

“It has a sustained impact on the entire population and actually makes demographic changes. If the proportion of short-term stays is high it pushes families out, not just because they can’t afford to live there, but also because they don’t want to live next door to party houses.”

He suggested Airbnb be limited to certain areas which may be experiencing an oversupply to help balance the market.

“In an ideal world, Airbnb would only be allowed in certain areas based on demographic, supply of properties and other considerations such as supporting the local economy.

“It must be balanced against the needs of the current residents as well as demand, and take housing affordability into account.”