My thoughts on Melbourne's Airbnb Restriction Proposal
The mayor of Melbourne, Sally Capp, suggests capping short-term rentals — by 180 nightscap with a small amount of registration fees. Melbourne is short of housing. Their rental vacancy sits at 0.8% (3% is a good rate).
What does that imply to a prospective Airbnb host? Let’s take a look at some numbers about Airbnbs in Melbourne first.
Quick Airbnb Stats on Melbourne
As of June 2023, there are 19,872 active Airbnb listings, which had received a booking in the past 12 months. There are 4,339 listings from VRBO, Booking.com, and TripAdvisor. The median occupancy rate of an Airbnb listing in Melbourne is 68% with the average booked daily rate being $242. Currently, there’s no (less than 1%) listing that has put a short-term rental license on Airbnb. For your information, a host can put their license on an Airbnb listing if they have a permit from the local government.
In Melbourne, a typical 2-bedroom house on Airbnb generates $60,000 a year with a 74% occupancy rate (270 nights/year) and $223 per night. Whereas, a typical 2-bedroom rental house on a long-term lease generates about $30,000 a year.
Data Source: Airbnb Analytics: Airbtics
My thoughts
A typical Airbnb host would only get 270 nights a year if they make their listing available for 365 nights a year. Due to the 180-nights rule, they’ll lose 90 nights a year. What will happen? Let’s look at Sydney. They only allow short-term rentals to be operated without a homeowner in their presence for 180 nights a year. Now, they have 12,000 listings (40% less than Melbourne), yet their daily rate remains relatively low.
So, the nightly rate won’t increase much, yet more Airbnb listings will be taken off the market. I anticipate that about half of the listings (10,000) will convert to long-term rentals over the next 3 years. Why is this? It’s because Sydney’s tourism size is about 13% bigger than Melbourne according to TRA. With this in mind, there’ll only be 10,000 remaining (87% of Sydney’s current number of listings) Airbnb listings.
This means more long-term rentals will be available for Melbourne residents, and fewer short-term stay options will be given to Melbourne tourists. Hotels and resorts will benefit from this.
Melbourne only needs an extra 5,000 long-term rentals for it to have a healthy rental vacancy rate of 3%. I believe this can be achieved by allowing somewhere between 200–240 nights a year. believe this will supplement enough housing for Melbourne residents while Melbourne visitors have a relatively good amount of short-stay options.
