Short term accommodation not the answer to the housing crisis

Short term rental accommodation is being closely examined by the state government and City of Melbourne as part of the solution to Victoria’s housing crisis. 

As the CEO of the only professional association for short term rental accommodation in Australia I can assure you my members who own the properties, want to do their bit, but looking to us as even a small part of the solution is ill-informed and misguided.

Firstly, independent market research that our sector has commissioned shows that even with the Victorian Government’s proposed 7.5 per cent tax applied, our members will continue to operate their properties as short term rentals. They will not offer their properties to the long-term market.

What the tax will do however is impact how often people travel, reduce the discretionary spend of the guests that stay in our accommodation, and it will shorten their stay. In regional areas it will decimate the visitor economy. 

The Australian Short Term Rental Accommodation Association (ASTRA) does not support nightcaps. Overseas experiences show they don’t work. After New York City put restrictive rules in place hotel prices shot up and the short-term rental accommodation market moved underground. 

Rents in the big apple increased by 2.3 per cent and the availability of rental inventory dropped by 3.6 per cent. Caps led to an underground black market of properties without property insurance and or compliance and regulation. 

Contrary to popular perception, evidence shows that short term rental accommodation – which represents around one per cent of all housing stock in Australia – is not a significant cause of housing affordability and availability issues.

Recent reports, such as the Urbis report into short term rental accommodation in 2023, highlight the lack of consistent correlation between short term rental accommodation stock and long-term rental availability or affordability across major Australian cities.

As a result, ASTRA emphasises that short term rental accommodation should be viewed as a minor part of the solution rather than a noteworthy culprit. The solution to our housing crisis lies in accelerating the approval process and increasing the construction of new homes.

A little-known fact about short term accommodation is that more than 40 per cent of stays in the City of Melbourne are for guests staying for non-leisure reasons e.g. construction workers, families displaced by natural disasters, event attendees, medical support visitors, families fleeing domestic violence.

ASTRA also advocates for the introduction of a government registration portal for ASTRA properties and a robust code of conduct. 

As the CEO of ASTRA, I am committed to ongoing collaboration with the Victorian Government and parliamentarians. Our aim is to ensure that regulations are fair and do not disproportionately impact short term rental accommodation operators, who are predominantly local community members making substantial economic and social contributions.

Mitchell Price is the CEO of the Australian Short Term Rental Accommodation Association