28 Aug 2020

Mixed fortunes in holiday home market as some Sydneysiders rent 'second homes'

Wealthy Sydneysiders are taking out long-term leases on properties normally rented out on Airbnb and using them as second homes to escape the city during the pandemic.

While the Airbnb market has sunk in inner-city areas, adding to a glut of rental apartments going cheap, demand remains strong in harbourside pockets of Sydney and regional holiday towns.

That was partly driven by some Sydneysiders taking out long-term leases on properties normally let through Airbnb or Stayz, and splitting their time between there and home, said Emily Sim, chief executive of property management for the Ray White Group.

"People who have the means are going and renting a holiday house permanently and living between Sydney and the holiday house," she said. "They're saying 'oh well, we can't go to Europe this year, let's rent a holiday house for six or 12 months'."

Ms Sim said holiday home owners on the South Coast, Central Coast, Mid North Coast and Jindabyne during the snow season were "having a wonderful time" with low vacancies and high rents.

Michael Conolly, head of network property management at McGrath, said the Mollymook office on the South Coast had the same demand for holiday rentals in July that it usually has in the peak Christmas season, because families were holidaying in regional areas.

But Ms Sim said the opposite was true in the inner-suburbs of capital cities, where the market had been flooded by Airbnb rentals entering the long-term rental market. Ray White's rent rolls in Brisbane, Sydney and Melbourne had grown strongly.

"Vacancy is high because we've got so much new stock that has come from Airbnb," Ms Sim said "Some of it's been furnished, but the majority of owners have moved the furniture out and moved it to a longer term tenancy."

Ms Sim said the high vacancies were exacerbated by city hotels letting hotel rooms on leases that fall under the Residential Tenancies Act because they are longer than three months.

Mr Conolly added that the lack of international students was another driver of vacancies in the inner-city apartment market in Sydney.

However, Mr Conolly said some of the Airbnb properties around tourism-oriented parts of the city such as Millers Point and the Rocks were still being used as holiday rentals for visitors from other parts of NSW and Australia.

"When this all began we thought a lot of these properties would come onto the market for the long term," he said.

"What happened was there was a really quick spike and then they turned around very quickly ... and converted straight back to Airbnb."

Ms Sim said rental vacancies were lower more than 10 kilometres out from city centres because people felt less pressure to live near the city and wanted more space while working from home.

In keeping with this lifestyle trend, Mr Conolly said McGrath Central Coast reported tenancy vacancies were at 0.36 per cent rather than the usual 2-3 per cent.

In Palm Beach, LJ Hooker senior property manager Kirsty Frazer said there was a shortage of rental properties, partly because owners were using the properties for themselves and also because of increased demand.

The holiday market was booming and Ms Frazer said there was strong demand for long-term rentals as Sydneysiders wanted to move from other parts of the city.

"We've got huge demand from clientele in the eastern suburbs, city areas, some lower north shore, they're all wanting to venture out this way and just escape those city zones," Ms Frazer said.

The northern beaches agency had a number of holiday properties that converted over to long-term leases at the start of the pandemic but Ms Frazer said she expected them to convert back to the short-stay market in the spring.

Susan Wheeldon, Airbnb's country manager for Australia and New Zealand, said the platform "had not seen a material drop" in listings.

"While a very small portion of hosts have understandably had to make difficult choices based on their personal circumstances, our community remains ready to continue to drive tourism and support local jobs," she said.

Julian Jones, an Airbnb host for seven years, used to lease his Katoomba cottage with a separate studio out the back. He moved into the cottage full time at the start of the pandemic and found a tenant for the studio, and was stung by the platform charging him hundreds of dollars in cancellation fees.

But he was keen to return to Airbnb hosting. "Lots of people are coming up to the mountains for breaks because it’s one of the few places you can go," Mr Jones said. "It's booming."

Airbnb has provided $US250 million for hosts affected by pandemic cancellations worldwide and its employees, founders and investors contributed to a grants program for "super-hosts". Mr Jones said he was not eligible.

SOURCE: https://www.smh.com.au/lifestyle/life-and-relationships/mixed-fortunes-in-holiday-home-market-as-some-sydneysiders-rent-second-homes-20200807-p55jnj.html

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