With a regional tourism boom and the potential for greater financial returns, more property owners in some regional centres are listing their homes for short-term holiday accommodation instead of leasing to long-term tenants.

Key points:

  • Regional areas across Australia are experiencing mass rental shortages
  • A boost in domestic tourism has been an incentive for owners to offer their properties as short-term rentals
  • The demand for long-term rental properties has led to $100 a week increases in some regions

In just a 15-minute period Leisa McKinnon’s phone goes off twice: a five-night booking and a three-night booking for her Airbnb property.

“There it goes,” Ms McKinnon said.

She is accustomed to her phone’s “ping” as guests book her two-bedroom, one-bathroom brick home in the middle of Mount Gambier in South Australia’s south-east.

Since she started on Airbnb in July 2019, the number of available properties in town on the short-term rental platform has swelled from 88 to more than 150.

This story is echoed throughout regional Australia with property owners opting to rent their homes on sites like Airbnb instead of hosting long-term tenants.

While it is good news for regional tourism, real estate professionals say the success of short-term rentals presents a catch-22 when it comes to Australia’s rental crisis.

Lisa McKinnon’s property is simple but couldn’t be busier with guests.(ABC South East SA: Bec Whetham)

High demand for rentals in regions

Mount Gambier’s Maddie Provis spent most of her pregnancy applying for rental properties.

After eight months of applying for more than 50 rentals, she and her partner made a public plea on Facebook in desperation.

“I posted the picture of me and my partner and explained our situation,” Ms Provis said.

“I did feel a little bit of guilt when there were comments about people that had been looking longer than us and had established families.”

Maddie Provis was looking for rental accommodation for eight months.(ABC South East SA: Bec Whetham)

In Mount Gambier demand for rental properties is at a record high.

Local real estate agent Jessie Little said it was difficult for agents to turn perfectly good applicants like Ms Provis away.

“There’s no reason people are missing out and that’s the hardest thing to do deal with,” Ms Little said.

“It’s not as though we can even give feedback … it’s genuinely we just do not have enough property.”

South Australia’s second largest city, Mount Gambier continues to grow.(ABC South East SA: Bec Whetham)

President of the Real Estate Institute Adrian Kelly said the rental shortage in regional areas had worsened since the onset of the COVID-19 pandemic.

“That was certainly [an issue] pre-pandemic and it’s only been exacerbated now because of the pandemic,” Mr Kelly said.

New rental listings for family homes in Mount Gambier are attracting 50-plus applicants.(ABC South East SA: Bec Whetham)

Regional tourism boom

Mr Kelly said one of the contributing factors for the rental shortage was the growth in regional tourism and short-term rental listings.

“For every property that gets put onto the short-term market it’s taken away from the long-term market,” he said.

“That obviously affects tenants both locally and those wanting to move to the area.”

Mr Kelly said an owner renting out their property for short-term accommodation, it was often a financial decision.

“What we are finding is that some property owners are preferring to head down that path because it helps to cover the increasing costs of the outgoings — particularly things like land tax, which seems to go up a good five or 10 per cent every year.”

Airbnb’s country manager for Australia and New Zealand Susan Wheeldon did not comment on the impact its short-term accommodation was having on the private rental market, but said Airbnb hosts were supporting regional economies.

Airbnb says its regional hosts are “helping to drive tourism recovery” following the COVID-19 travel restrictions of 2020.(Unsplash: Eric Nopanen)

“Local hosts on Airbnb are really keen to make a big contribution to their region’s economic recovery by rolling out their welcome mats and bringing tourist dollars to the area,” Ms Wheeldon said.

“People have been using Airbnb to find affordable and unique family-friendly getaways to spend quality time with loved ones — particularly in places like Mount Gambier — which are within driving distance of major cities.”

She said the company was focused on boosting the country’s tourism following a “challenging year for everyone”.

Increased competition among renters

In Dunsborough, Western Australia, Anna Barr cannot help but wonder what impact the growth in short-term rental accommodation is having on her living situation.

She is preparing to move in with her ex-husband after being unable to secure accommodation.

After struggling to find a rental, Anna Barr is moving back in with her ex-husband.(ABC South West WA: Georgia Loney)

Ms Barr has been competing with another 50 families all applying for only a handful of homes in the town.

Near Margaret River, Dunsborough has always been popular with tourists, especially during COVID-19.

“If we didn’t have all the tourists coming down throughout the whole year last year, we may have had a few more rental properties,” Ms Barr said.

Big impact on affordability

Real Estate Australia chief economist Nerida Conisbee said the shortage of properties was causing rental prices to rise.

“Affordability is getting a bit of a problem in some locations,” Ms Conisbee said.

In Dunsborough, real estate agent Joe White said he was especially concerned about lower-income earners.

“There probably is going to be a welfare issue for six months until the market sorts this thing out.”

Dunsborough real estate agent Joe White.(ABC South West WA: Georgia Loney)

Ms Conisbee said the factors that were causing the rental shortage were not likely to go away any time soon.

The solution?

Mr Kelly said the short-term answer was to build more homes.

“Whilst that sounds very simplistic, that’s the only thing that’s going to solve the problem and make sure there’s enough supply to suit everybody,” he said.

There is also a construction backlog in Mount Gambier’s housing developments.(ABC South East SA: Bec Whetham)

Mr Kelly realises the time and energy involved with building a home puts some investors off.

“It can take up to six to 12 months before you even get a shovel in the ground, but you need to start somewhere,” he said.

“If the building process can start today … then that would encourage more people to build those properties because the return would be there in the end.”

Mr Kelly said it would be nice to reach an equilibrium with enough properties for the short- and long-term markets in regional town to meet everyone’s needs.

“But it’s certainly a long way off doing that at the moment,” he said.