The Airbnb gravy train is off the rails due to impact of COVID-19. Investors continued to shift their short term rental properties to the long term market in NSW, Australia’s largest state, through May with vacancies in inner Sydney hitting an 18-year high, “a trend that’s likely to continue.”
The Real Estate Institute of NSW revealed that long term rental vacancies in Sydney increased for the third consecutive month and now sit at 4.1%, up 0.3% from April and 1.1% from March as COVID-19 disruption continued to impact the residential rental market .
“Sydney’s Inner Ring experienced the most significant change, rising 0.7% to 5.0%,” REINSW CEO Tim McKibbin said.
“This is a historic high. The last time vacancies in the Inner Ring broke through the 5% barrier was in June 2002, almost 18 years ago, when vacancies hit 5.1%.
“The Middle Ring also increased, with a 0.2% rise to 4.6%. Sydney’s Outer Ring was alone in recording a decrease in rental vacancies, falling 0.4% to 2.7%.
“These results are evidence of the extent of COVID-19’s impact on the market.
“With so many people experiencing job losses or reduced pay, it’s not surprising to see inner-city properties with higher weekly rents being relinquished by tenants, either for more affordable options in suburbs more distant from the CBD or to move in with family members.
“We’re also seeing a continuation of the trend for short-term accommodation properties being listed for long-term rentals.
“With tourism plummeting, short-term rental cancellations have sky-rocketed, meaning landlords have had to rethink their investment strategy and list their holiday rental properties on the long-term market.”
“Together, these factors have resulted in an increase in rental vacancies in the Inner and Middle Rings, which is a trend that’s likely to continue in the coming months.”
Data from industry analyst AirDNA shows that the number of active short term rental properties in Sydney being marketed through Airbnb and Stayz has halved since the first quarter.
In three months to March 31, AirDNA says there were 36,000 active listings in Sydney compared with just 19,000 in the second week of June – a fall of 47%.
The drop in the number of Sydney short term rentals is much greater than the national trend mapped by AirDNA.
According to the Colorado based company there were 202,000 active short term properties throughout Australia in early February, compared with 164,000 last week, down 19%.
Meanwhile, McKibbin from REINSW said many regional areas in NSW reported marked increases in vacancies during May.
The Mid-North Coast rose to 3.2% (up 0.6%), Murrumbidgee jumped to 2.0% (up 0.9%) and New England climbed to 3.9% (up 0.5%).
Vacancies in the Hunter region increased by 0.4% to 2.4%, and the Illawarra region remained stable at 3.6%.
“Higher vacancy rates are likely to remain the norm in the coming months in many areas, particularly for metropolitan hubs and holiday areas, and this will have the knock-on effect of decreasing rents as landlords are faced with more competition to secure tenants.
“How long this trend will continue is anyone’s guess. It’s really a case of ‘watch this space’, as the impact of easing restrictions and people returning to work starts to filter through to the housing market.”