H.L. Mencken famously said that “for every complex problem there is an answer that is “clear, simple, and wrong". So it seems today in the complex debate around housing affordability.
Some people are now claiming that Sydney’s housing affordability crisis is the fault of home sharing generally, and Airbnb specifically.
Airbnb’s growth in Australia has been remarkable. Australians have overwhelmingly voted with their feet and embraced home sharing. But of course, Airbnb’s rise has not been without a cost. Airbnb has become the go-to scapegoat for all manner of public policy concerns, including the cardinal Australian sin of making homes more expensive.
As we have seen overseas, the debate on Airbnb’s potential impact on housing affordability has not been grounded in the facts but in perceptions or anecdotes. To add fuel to this fire, some people at home and abroad have jumped on the bandwagon in the name of a headline, throwing out misleading and premature statements which masquerade as conclusions.
Put simply, blaming Airbnb for housing unaffordability is as absurd as blaming smashed avocados - it just doesn’t stack up. Let’s set the record straight. First, as any Sydneysider would know expensive housing is not a new problem. It is a problem that has been around long before Airbnb arrived on the scene less than a decade ago.
Secondly, housing affordability is in Airbnb’s very DNA. Our community was founded during the GFC by three millennials trying to make rent. With wage growth in the gutter and the cost-of-living sky high, home sharing makes housing more affordable.
For many hosts, who earn on average just $4842 a year, Airbnb is an economic lifeline. As reported by Fairfax Media, Australia has a mismatch between the demand and supply for rooms in Australia. Our platform frees up latent or underutilised capacity in the housing market by allowing people to use the one or more unused rooms in their home.
Thirdly, Airbnb is not a significant factor in the local housing market. Airbnb represents roughly one per cent of the total housing market in Australia. In Sydney, which has the most listings of any Australian city and double the number of listings of Melbourne, our community still only represents a tiny fraction - around 1 per cent - of the local market. To put that in perspective, there are close to 10 times as many empty homes in Australia as there are Airbnb listings. There are more empty homes in Sydney alone than there are Airbnb’s in all of Australia.
Fourthly, focusing on the number of listings alone is like only telling half the story. The vast majority of Airbnb hosts in Australia list their primary residence - the home they live in - for an average of just 30 nights per year. That’s not a home being taken off the market. It is everyday people using their home maybe when they are on holidays or traveling to make a little extra money.
Finally, independent research from at home and overseas has found no material link between Airbnb and worsening housing affordability. For all the breathless hype, Airbnb is not making homes or rents more expensive.
The NSW Tenants Union in their expert 2017 report, Airbnb and renting in Sydney, found Airbnb had had no discernable impact on vacancy rates, and that there is no link between Airbnb and increases in rent.
Housing affordability is a wickedly complex public policy problem. Any mature and prudent debate must look at the real drivers of affordability. The biggest levers at the disposal of government, the policies that will make the biggest impact, remains things like negative gearing, the tax system, the planning system and the population. As such, we should beware of anyone spruiking clear and simple answers.
- Brent Thomas is the Head of Public Policy Australia and New Zealand at Airbnb