- As short-term visitors disappear from Australia due to the coronavirus, properties listed on Airbnb are flowing back onto the rental market for the first time in years.
- The influx of supply, combined with a lack of demand to move, is putting some downward pressure on rents.
- Long-term, both agents and economists expect rental prices to take a dive as the Australian economy deteriorates.
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Airbnb owners around the country are feeling the pinch, as the threat of COVID-19 turns the tourism tap firmly off.
With the federal government shutting the border to overseas arrivals, and Australians urged to stay at home, short-term booking calendars are looking eerily empty for months, with owners now forced to put their properties back on the rental market.
“It’s definitely something we’re seeing happen right now. I’ve just listed five Airbnbs for rent,” Jacob Caine, CEO of Caine Real Estate in Melbourne, told Business Insider Australia. “We have clients that have transitioned to Airbnb previously and used us to value their properties. They’re now moving back to the rental market and I expect to see even more flying in soon.”
Caine is at the centre of Australia’s largest Airbnb market, with more than 3,100 listings in central Melbourne alone, according to University of Queensland professors. Caine believes that figure is now falling, as owners start to come to terms with the full extent of the coronavirus crisis.
“There were owners who began raising it with us a few weeks ago, but this week I suppose has been the tipping point,” he said.
“I suspect there are still people refusing to acknowledge the severity of the situation and what we’re on the cusp of. There are some who are considering maybe listing their property for a three-month lease, and I’m just telling them flat out if you’re not tuned into what’s happening in the world, then you’re deluding yourself if you think someone’s gonna sign a three-month lease right now.”
“People are looking for some form of security. And realistically, that’s six months, at the very least, and even that’s probably borderline what anyone would accept with any confidence at this point in time.”
Melbourne is hardly alone. From Surfers Paradise to Perth, there are tens of thousands of Airbnbs dotted around the country – properties that have been taken out of the local rental market to cater to short-term visitors. As the coronavirus puts a stop to both international and interstate travellers, and property owners desperately look to keep servicing their loans without them, Airbnb’s defence of its model as having a negligible effect on rents is about to be tested in a real way.
Take Bondi, home to more than 1,100 Airbnbs. Raine and Horne Bondi business development manager Matthew Serrao says that could be about to fall.
“Airbnbs, as well as all short-term rentals, are feeling it right now. It’s tough,” Serrao told Business Insider Australia.
“In the last two days, I’ve listed seven properties and five of those have been for past clients who had gone down the Airbnb route or short-term rentals that are now saying to me, ‘I need to get a long-term tenant in’,” he said.
It’s a complete turnaround from what agents have seen previously, typically helping owners transition into the Airbnb market as opposed to helping them get out of it.
It puts those owners in a precarious position. Not only are some now rushed to get in a long-term tenant but they also have to consider what to do with things like furnishings, a staple of Airbnbs.
“Ultimately they want to keep them furnished so they can relist on Airbnb in six months, but that simply might not be an option. Some don’t have anywhere to store it, and obviously their ability to sell it at the moment is fairly compromised too,” Caine said.
On the other side of the equation, the situation may mean bargain rents for those who are willing to risk moving right now.
“There’s a sense of opportunism at the moment, as uncertainty and anxiety see rental applicants withdraw from the market if they can just continue staying where they are,” Caine said. “Owners meanwhile are reducing prices because they sense there are more restrictions to come which will make it even harder to fill vacancies.”
While not convinced the influx of Airbnbs may impact the market long term, Caine believes the entire property industry is now facing a serious dilemma.
“The situation regardless is about to cause a very significant impact downwards on rental prices,” he said.
The ongoing health crisis could put the rental market on hold entirely, with the Federal Government banning open inspections and closing auction houses for the foreseeable future.
Meanwhile, the economic picture is liable to have far larger ramifications for the property market. As the coronavirus shuts down businesses, economists say an Australian recession now looks unavoidable, with Westpac forecasting unemployment to more than double to 11% by June.
“There is no doubt the uncertainty in the economy as a whole will have some impact on buyer and seller confidence, just how far that goes remains to be seen,” realestate.com.au chief economist Nerida Conisbee told Business Insider Australia. “Broadly, the changes occurring seem to be impacting the rental market first. We are seeing an increase in rental listings for a variety of reasons including short-term rentals being converted to long-term and renters starting to find other forms of accommodation.”
Falling rents then may simply prove to be a bittersweet pill as the economy continues to sour.
Business Insider Australia has reached out to Airbnb for comment.