As New Zealand faces pressure to cool its overheated housing market, top-earning Airbnb hosts in two of our hardest-squeezed cities are raking in million-dollar fortunes. Talia Shadwell investigates.
In tourist playground Queenstown, one Airbnb host made $2.9 million in the year to October accommodating short-term stays across 19 properties, according to new figures from research agency AirDNA.
The Queenstown superhost (whose identity has not been revealed by AirDNA, citing privacy concerns) has likely skewed the figures, which show the average Airbnb host in the southern city raking in $81,992.71 in revenue in the year to October.
Scouring the Airbnb site reveals plenty of contenders for the mystery host: some in Queenstown advertise as many as 10 entire properties apiece.
But it’s also clear that not all hosts on the site are the homeowners themselves. These mystery “millionaire” Airbnb tycoons – like the top-earning Auckland “host” making NZ$3.1m a year from a portfolio of 154 properties – may well prove to be nothing of the sort.
Alistair McIlwrick, director of vacation rental management company Relax It’s Done, is unmoved by the remarkable numbers. “Lies, damned lies and statistics,” he says. “The figures have can be quite misleading as there is no breakdown as to the individual. [The] $2.9 million for 19 properties quoted may be a property management company.”
“Unfortunately, Queenstown Lakes District Council and others base their policies on these statistics.”
Queenstown mayor Jim Boult says he has no quarrel with people making money from housing, but what benefits a few is not working for the rest.
“There is a lack of available long-term rental properties for families and workers in the district. Much of the housing stock is now taken up by short stay visitors [and residents are concerned] that often the house next door has essentially become a number of hotel rooms.”
The council’s controversial proposal to crack down on homeowners making a living out of short stay accommodation sites like Airbnb and Bookabach went out to public consultation last week.
The council wants to reduce the amount of time hosts in low-density residential zones can rent out their entire home to holidaymakers, from its current 90-day restriction to 28 days in a year, with a maximum of three separate lets.
Listings across short stay accommodation sites increased 61% across Wanaka and Queenstown in the 11 months to August, according to council figures. By then, 14% of the district’s homes – around 5000 dwellings – were being offered on short stay accommodation sites, compared to 1.2% across the rest of the country.
Airbnb’s original concept touted a sharing model where strangers opened up their spare rooms and ways of life to fellow travellers.
A spokesperson for AirDNA, which specialises in “Airbnb data and insights”, said professionalisation had been linked to an increase in listings’ quality, but it’s “also a departure from the unique and hosted stays that some Airbnb guests are looking for when they book through the platform, which makes it more difficult for guests to distinguish between a corporate rental and a hosted stay.”
The short-stay market holds obvious appeal as an income stream in New Zealand, a nation with a deep affection for bricks and mortar investment. The effect of that on Queenstown renters and traditional accommodation providers – threatened by what many have characterised as under-regulated competition – has also been well-documented.
What is clear is that low-paid but essential tourism and seasonal workers are the biggest losers of the stretched rental market.
Peter Newport’s Spinoff investigation uncovered Queenstown’s rotten rental market, featuring over-crowded flats and budding slumlords. In one striking 2015 example of the lengths Queenstown workers were going to in order to have a roof over their heads, a landlord faced heat when he bought a nine-bedroom house where 20 mostly migrant hospitality and ski field staff were found living.
Tourism expert David Hammond says he’s been told of some tenants paying up to $500 a week for a room, and that a “shift swapping” rent-sharing phenomenon is emerging “where one tenant sleeps in bed at night, and another in the day in the same bed.”
NZSki CEO Paul Anderson says he estimated 450 of the organisation’s seasonal staff had not secured a place to live by the time they arrived last year. The other 450 were established locals or long-term seasonal workers who already lived in Queenstown.
“There’s no single feasible solution that will remove the squeeze that occurs when many staff arrive in town at the same time looking for accommodation,” he said.
“Without a doubt, we know that homestay-type accommodation is a part of the solution, and we’ve found it to be fantastic for both our staff and the families that host them. However, in the longer term, we’re in discussions with a number of developers about new developments that we know will help by adding accommodation supply in the medium term. We also own some of our own accommodation in Queenstown which we make available for staff.”
Until changes are made, the shrinking rental pool will affect those wanting to live and work in the growing district permanently, says Boult.
“It’s difficult to find an ordinary three bedroom house for anything less than $600 or $700 a week. Council also has a long list of complaints from neighbours of properties rented for short stay visitor accommodation.”
An Airbnb spokesperson previously labelled the proposals “nanny state” restrictions, which would affect tourism rates.
Boult emphasises that the council has no desire to exile Airbnb or similar providers. The council’s own research shows that the site’s market alone can be credited with generating $68.6 million for the local economy in the 11 months to August.
“I have no problem with folk making money from letting out [their] houses,” says Boult. “We live in a wonderful free democracy and it’s perfectly legal to rent your house. This is not the issue that concerns us… We welcome Airbnb to our district and have an excellent working relationship with them but the continued use of houses in the suburbs as pure visitor accommodation does not sit well with large parts of our community.”
Hammond thinks the Queenstown love affair with short stay accommodation stems from the high proportion of baches that would historically have remained unused in off-seasons, and from pressure on over-leveraged homeowners.
“Half of the houses in Queenstown are rented out for just over one-third of the year and empty for the rest in the midst of a rental housing shortage crisis for low paid workers. These [houses] are being pulled off the rental market and placed on Airbnb where they get better returns and more choice about when owners can use them, rather than tying them up in less flexible longer-term rentals.”
A spokesman for housing minister Phil Twyford said it was too early in Labour’s tenure to comment on whether central government could address the rental-market issues facing tourism towns, or its stance on the bed tax idea proposed under the previous government.
Hammond says the issue is better handled district by district. Queenstown looks set to be the first authority to do so in a country that has been slow to view the short stay rental market as a commercial activity.
“Overall in New Zealand, the tourism crazy nation has over-invested in the message to come and visit and under-invested in the tourism infrastructure to cope with that growth… a lack of coordinated leadership and bureaucratic inertia from central and local government and the tourism industry has allowed the gap to grow to a crisis.”
Airbnb has been approached for comment.
The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.