10/12/2018
Short-term leases have long been deemed high-risk by homeowners, but thanks to the thriving growth of the sharing economy and platforms such as Airbnb, perceptions change quickly.
An ever-increasing number of investors rent their properties in the short term – often to itinerant professionals or international tourists – for an impressive premium.
However, the market having grown considerably in recent years (Airbnb listings in Australia increased from 43,610 in December 2016 to 89,863 in December 2017), the offer could it soon exceed the demand?
Three short-term rental specialists from MadeComfy are convinced that this is not the case and shared their thoughts on what is on the horizon for the three largest cities Australian.
Probably the most popular city in Australia for short-term rentals, Sydney recorded 41,000 Airbnb bookings in December 2017 alone (according to the report on the short-term rental of MadeComfy) and it seems that the same thing will continue in 2019.
"The short-term rental market in Sydney is fueled by the demand for places to stay by a growing number of international and interstate visitors," said Mike Johnson, MadeComfy's sales manager.
The most recent figures from the NSW government indicate that Sydney has received more than 9.9 million domestic visitors and nearly 4.1 million international visitors in the 12 months to March 2018.
"The number of available hotel rooms is not increasing as fast in some areas and more and more visitors wish to stay in homes, apartments and close to their families, rather than close from the city or popular tourist destinations, and this will continue to increase short-term demand in Sydney, "says Johnson.
As can be expected, Sydney also enjoys the highest price per night, and according to Johnson, homeowners in the area can expect to enjoy the same income throughout 2019.
"Sydney has a unique combination of cities, ports and beaches, events, sports and entertainment all year round in its varied suburbs," he explains to Your Investment Property .
"Warmer climate attracts tourists to Brisbane all year round"
"This means that the demand for exciting and comfortable places to stay will remain high and continue to favor higher yields for homeowners."
As for the future, Johnson also indicates that Sydney will be affected by NSW's short-term rental legislation, which is likely to come into effect in mid-2019.
"This fully legalizes short-term rentals in NSW, and also allows homeowners to use a mix of short- and medium-term stays to achieve maximum yield while complying with legislation."
Recognized for being both unconventional and creative, it is not surprising that Melbourne has adopted the sharing economy and rental space in the short term with a particular speed.
In fact, in the state of Victoria, short-term rental reservations accounted for 16% of all accommodation bookings – the highest percentage of any country.
While Melbourne's per-night rate for listings is lower than Sydney, property prices are comparable and demand is high, so investors in both cities can actually look for returns similar, says David Powell, managing director of MadeComfy Melbourne operations.
"Melbourne has always shown that if you had the right property, sold well and managed well, the percentage yield is very high, especially for apartments in the center and the suburbs," says Powell.
Importantly, high-end CBD apartments with quality amenities such as a gym, swimming pool or lounge have become extremely rare in the city and could offer an incredibly lucrative opportunity in 2019.
"I expect these types of properties to work very well if they are for the short-term rental market," Powell says. "Furnished and professionally decorated apartments in one- and two-bedroom inner suburbs are also performing because they have the ability to stand out from the competition in a market often saturated with new construction clinical apartments. "
Sydney and Melbourne may dominate the short-term rental market, but homeowners in Brisbane have one thing in store for their most popular counterparts in this city that shows no sign of change in 2019 – the time what he does.
"The warmer climate attracts tourists to Brisbane year round, especially in winter and spring, when visitors from southern states seek to escape the cold," says Melissa Baker, general manager of operations from MadeComfy to Brisbane.
Of course, the reliable weather is not Brisbane's only asset. In fact, the city is less seasonally affected than Sydney and Melbourne, due to strong housing demand from both business travelers and tourists.
"Brisbane is Queensland's main business hub for operations with satellite offices in regional centers. this regularly brings business travelers to Brisbane, "Baker says.
"The area is also often used as an intermediate stop for tourists traveling in southeastern Queensland; they visit the city regularly for a few days while traveling between the Gold Coast and the Sunshine Coast. "
It is clear that owners of short-term rental properties have many opportunities, especially those who invest in one of Australia's largest cities.
Want to know more?
Want to know more about trends in short term rentals in Sydney, Melbourne and Brisbane?
Download your copy of Australia's Short Term Rental Report at www.madecomfy.com.au
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