House and rent prices in major cities impacted more by population growth, not short-term rentals

An Airbnb survey has found short-term rental accommodation has a limited effect on rental prices and no significant effect on house prices. Photo / Stock Image 123rf

House and rental prices in some of the country’s biggest cities are not heavily impacted by the presence of short-term rental accommodations in those areas, a new survey has found.

Instead, it is population growth and interest rates in those areas that have the greatest influence on rents and house prices in Auckland, Wellington, Queenstown-Lakes District and Christchurch.

In Auckland, rent prices rose sharply in 2015 when the population growth was running faster than the growth in the number of dwellings in the city. Rent increases have been maintained, since 2016, at a fairly moderate pace due to low interest rates.

During the Covid pandemic years, there was weak growth in Auckland’s average rent – the same as short-term rental accommodation (Stra) after international borders were closed, keeping tourists out.

The survey, The effects of short-term accommodation on local housing markets, was commissioned by Airbnb and carried out by economic consultancy firm Infometrics. Its findings have been released today.

Infometrics chief executive and principal economist Brad Olsen said the New Zealand housing market fundamentally suffers from a lack of supply – causing house prices and rents to rise over time.

“Although people often focus on short-term accommodation as a key reason for higher rents and housing costs in some areas, this analysis clearly finds other factors have a much greater influence,” he said.

“When we looked across the range of possible factors that could influence rental prices, short-term rental accommodation only had a limited influence on rents and no real influence on house prices; providing some important evidence to add to the debate about housing, rents and the Stra sector.”

Looking at the Queenstown-Lakes District as an example, he said the survey found that short-term accommodation contributes negligibly to monthly rental price increases.

The average amount was an additional 35 cents a month. In comparison, between January 2018 and September last year, population growth in the region influenced a $101 per week increase in weekly rent – while short-term accommodation only influenced an $11 a week increase.

Olsen said their model looked at house and rental prices over time relative to changes in other factors that influenced the local housing market.

He acknowledged that people were the big factor. Other factors highlighted were record migration, low borrowing costs and high construction costs.

“Population came out as the factor that had the greatest influence on rents – with mortgage rates also having a noticeable influence,” Olsen said.

“However, when we controlled for all these other variables, our econometric analysis showed that the Stra influence on rents was very limited.”

Airbnb spokeswoman Susan Wheeldown said the new analysis shows that tailored solutions were needed to help solve housing affordability challenges. She also acknowledged that Airbnb wanted to work with Governments and communities to implement consistent nationwide rules to regulate short-term rentals.