Airbnb could actually be good for us

Digital platforms such as Airbnb are reshaping urban economies and introducing new revenue models within the “sharing economy”. What has its impact been on housing affordability, the long-term rental market, and the hotel industry?

I investigated this for my book Cities and Digital Platforms between late 2019 and 2023 and across seven cities: Amsterdam, Auckland, Christchurch, Queenstown, Sydney, Singapore, and Wellington. I found that the impact and disruption caused by Airbnb on a city very much depends on the city, the neighbourhood, and the regulations in which the platform operates.

In the New Zealand context, Airbnb can offer meaningful economic benefits if it is properly regulated, planned for and integrated into local planning.

One city is not necessarily like another. Airbnb listings in Auckland follow clear spatial patterns. Higher-value neighbourhoods are more popular, generating income for those who own homes in those areas, and supporting local businesses in turn.

Property prices in Auckland increased by 63 percent between the beginning of 2015 and the end of 2020, while purchasing power dropped by 39 percent, but there’s little evidence that house price inflation had much, if anything, to do with Airbnb.

Airbnb has been criticised for disrupting a sense of community, with more homes being given over to transient populations which can erode community cohesion. This is a legitimate concern, yet the CBD and nearby suburbs of Auckland were already home to transient populations (such as students) and Airbnb didn’t make a significant difference. In other words, rising rents and a transient population can erode community cohesion, and this can be a problem in central Auckland, but Airbnb isn’t the cause.

Deloitte estimated Airbnb’s contribution to Auckland’s economy at over NZ$200 million in 2018. For property owners in central areas, it provided extra income and for visitors it offered affordable and more diverse alternatives to hotels. Auckland Council has maintained a relatively light regulatory approach, only asking property owners to self-declare their short term rental use online.

Wellington is a slightly different story. It welcomed 22,291 international visitors in December 2023, and whereas Airbnb listings in Auckland are concentrated in residential zones, Wellington’s listings are concentrated in commercial and business areas.

Airbnb has ‘conceived’ and ‘lived’ effects. Conceived effects refer to measurable shifts in housing markets and regulations, and lived effects involve residents’ everyday experiences, such as neighbourhood change, a sense of displacement, or a loss of community and so on. In Wellington, these lived negative impacts often outweighed the measurable benefits.

Deloitte’s 2018 report estimated Airbnb’s contribution to the city’s economy at $38m, but Wellington City Council also reported negative consequences for hotels and commercial accommodation providers.

The regulatory challenge for Wellington council has been determining how to tax short-term rentals fairly. Wellington requires Airbnb to adhere to zoning rules, resource consent, and a 10-guest cap in medium- and high-density residential zones, but the council relies on self-reporting by property owners.

The economic impact of short-term rental platforms such as Airbnb is more significant in Queenstown where concerns reflect a broader tension between economic opportunity and the preservation of its identity.

From 2016 to 2020, land and property values rose sharply, especially in central and lakeside areas; properties valued at $500,000-$1m in 2016 often increased to higher brackets in 2020, sometimes reaching up to $5m. Although Airbnb listings grew, this was largely driven by overall economic growth, infrastructure upgrades, and rising property demand.

There, property owners have turned their second homes into income-generating assets, reducing the availability of long-term rentals. On the other hand, it offers more affordable accommodation options for tourists, who then contribute to the local economy.

Nearby Wanaka, however, has limited hotel infrastructure, so Airbnb has meant that residents haven’t been affected by large-scale hotel development and has meant the city has been able to preserve local character. Many Wanaka locals perceive Airbnb as a platform that allows them to benefit directly from tourism, rather than ceding that to commercial operators.

Airbnb has contributed to jobs and local services such as cleaning and property management in Queenstown, but housing affordability remains a major challenge. Notably, even when short-term rental numbers dropped during the Covid-19 lockdown, Queenstown still had a severe shortage of long-term rentals.

Queenstown Lakes District Council uses quantitative regulations (such as a 90-night cap) and qualitative regulations (safety, noise) to maintain some control over Airbnbs. It also benefits from taxation on rental income, although identifying residential versus commercial rates remains a challenge for the council.

Christchurch presents a distinct case, particularly in its effort to attract long-term residents after the 2010-2013 earthquakes. In 2017, Airbnb contributed $36m to the local economy, and some long-term rentals were converted into short-term rentals, especially in the central city.

In Christchurch Airbnb listings are concentrated in the CBD, Botanic Gardens, Lichfield Lanes, and coastal suburbs such as Sumner and New Brighton – areas that have tourist appeal. Though land values declined in earthquake-damaged areas by 2019, they began to rise by 2020 in zones with dense Airbnb activity. This trend suggests a link between Airbnb activity and increasing land values, probably because of higher returns and renewed economic activity.

Property owners have also repurposed unsold housing developments for short-term rental use, which in Christchurch’s context helped stimulate local economies and urban regeneration. However, this shift also means fewer long-term rentals. Christchurch City Council has struggled to monitor Airbnb activity, apply effective taxes, and distinguish between residential and commercial use.

However, my research suggests in Christchurch Airbnb may present more of an opportunity than a threat – if guided by careful, context-sensitive governance.

Digital platforms in times of crisis

Unlike cities grappling with over-tourism, such as Amsterdam and Lisbon, New Zealand cities can benefit from short-term rentals without the severe downsides, and add economic value and support the tourism sector.

It’s a platform that is good for hosts and local economies while aligning with Government tourism goals. In Queenstown and Christchurch, Airbnb has significantly shaped urban dynamics; in Auckland and Wellington, the effects have been more modest. For many homeowners, it provides an important supplementary income.

In cities such as Sydney, housing affordability concerns have led to zoning laws and tax measures to regulate Airbnb, and Singapore has taken a highly restrictive stance, citing neighbourhood stability as a priority.

In New Zealand Airbnb’s influence on housing affordability is relatively limited, with its primary effect being increased rents in specific high-visitation areas. As a short-term rental platform it presents an opportunity and its disruptive potential can be minimised with careful, research-informed planning that responds to local and regional conditions. New Zealand cities can find a way to leverage digital platforms such as Airbnb to support recovery and sustainable growth in the face of future crises, and with careful planning, the benefits will outweigh the harm.