Brad Olsen: Infometrics Chief Economist on the impact of short-term rentals on the housing market

The public's view of the impact of short-term rentals on the housing market could be about to change. 

New Infometrics data shows rental companies like Airbnb don't affect the housing market as much as population growth and interest rates. 

Short term rentals have often been singled out as contributing to housing and rental affordability challenges. 

Chief executive and principal economist Brad Olsen says fundamentally the market suffers from a lack of supply. 

He says the influence of short-term rentals isn't as large as it's made out to be. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Interesting new insight into the rental market and whether Airbnb
has had an effect on prices. The answer appy is
to be no. This comes out of a study done
by Informetric Chief executive principal economist. Brad Olsen is with
us on this Brad Morning. Just to clear this up,
you were commissioned by Airbnb to do this. Did you
get stitched up? As this legit?

Speaker 2 (00:19):
It is legit, and no, I don't get stitched up, Mike.
I think a lot more of myself and I think
others think a lot more of us for this. But
I think this is probably why Airbnb came to us.
I said, look, everyone always talks about what the effect
of Airbnb and similar might be on the rental market.
No one's actually done the numbers. We sort of just
talked about it. Can you go and do the figures?
And we did. We went into it with an open
mind and what we found was that actually the largest

(00:42):
influence on the rental and housing markets are fun enough
population growth, but also the interest rates airbnbs have. Other
short term rental accommodation doesn't have a particularly big influence
at all, which makes sense given the sorts of population
growth and similarly you've had over years, and suggests that again,
you really just need to increase the supply of houses
across the board if you want to improve housing outcomes.

Speaker 1 (01:04):
All right, let me pick up on a couple of
things here. If we didn't have the immigration growth we had,
would it be different.

Speaker 2 (01:11):
Well, I think it probably would be. But you'd also
then need to look at other parts of the economy
in terms of the labor market and similar Would we
have the right skills, would we have the right people
to do things? I think it's more that if we're
going to have migration levels like we've had it, and
I actually think that's a good thing, we sort of
also have to resource it well at the right time.
And I think you know, when we went through this analysis,

(01:31):
we pulled together a bunch of data on the lights
of the housing market over a longer period of time,
growth in the dwellings and similar and it continues to
suggest every report that we seem to do on the
housing market suggests that we just need to continually build more.

Speaker 1 (01:45):
Right, So are you suggesting immigration aside that there aren't
enough AIRB and B houses to affect the price, because
logic would indicate that if there's a house sitting on
a street and it's airb and b'd as opposed to
rent it, that must in some way shape or form
thick the rental market.

Speaker 2 (02:02):
Well, that was the interesting thing. That was another thing
that we did tests through the analysis, because there's always
this idea Mike that if you have an Airbnb, if
it wasn't in an airbnb, it would definitely be a
long term rental, and we found that often just wasn't
the case. Particularly in Queenstown for example, we found a
number of areas where, even before airbnb was ever a thing,
yet quite a lot of holiday homes and similar So

(02:23):
just because the house is there doesn't mean it will
be a long term rental. And therefore that's where when
we went through some of those figures, that's where we
found that actually it wouldn't necessarily be a huge conversion through.
What we also found, and I think this was sort
of particularly interesting, is that often I think we sort
of condense a few different issues together and that's where
you often get this talk of airbnb's having a greater

(02:45):
influence than they do. I sort of liking it in
a sense that if you had a look on a
cold winter's day, and you saw that there was an
increasing sale for jackets and an increasing sale for heat pumps.
You could make the influence that higher jacket sales influence
higher heat pump sales, not really that there's actually a
common factor, which is this temperature. For airbnbs, there's more
airbnbs over time, as well as higher rental prices because

(03:09):
there's more population. That is what it boiled down to.
When we sort of looked at all of the figures together,
we put them all into our model and we said,
what is the biggest influence on these outcomes on rents
and house prices? Population growth came out of a country
bile ahead. I mean for Queenstown, for example. We estimate
that broadly, over the last six years, the likes of
population growth contributed about a one hundred and one dollar

(03:30):
per week increase in rents. Airbnb did around eleven dollars.

Speaker 1 (03:34):
Right, would you as Queenstown unique though, because there'd be
a lot of flash houses in Queenstown that yes, you'd
higher out for five nights in a year at two
thousand dollars a night versus having some ski bum hang
out for fifteen hundred dollars. We can wreck your house.

Speaker 2 (03:50):
Quite possible, and I think the thing with Queenstown, that's
why we did spend a bit more time on it
because it does have a much larger concentration of short
term rental accommodation, so we did have a bit of
a look at that. That's why I just gave you
those numbers to try and highlight that figure. When we
looked at other areas though, So we looked at the
likes of Auckland, Wellington christ Church are much much bigger areas.

(04:10):
The concentration of airbnbs in those areas is quite a
bit smaller, so they just don't really have any discernible effect.
I mean talking, I think it's since per week, since
per month difference airbnbs do, so it's just not a
significant influence.

Speaker 1 (04:23):
Good insight, mate, Nice to have you on the program.
Has always Brad Olson infor Metric's chief executive.

Speaker 2 (04:28):
For more from the mi Casking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio.