Sharing Economy: Airbnb and the Leasing Crisis in Australia

AirBnb e l’algoritmo di ricerca” by ViaggioRoutard is licensed under CC BY 2.0.


With the rise of the sharing economy in the digital era, many media platforms have benefited from this new economic model, while some traditional industries have to facing unprecedented challenges. As a representative media platform in sharing economy, Airbnb can be considered to be in line with the trend of this new era (Harendra, 2019). By providing a digital platform that allows idle houseowners and short-term residents to communicate and trade in a guaranteed cyberspace, Airbnb has rapidly risen in recent years and become one of the world’s most well-known short-term leasing companies. As a country with numerous tourist attractions and a large number of tourists, Australia provides a vast housing rental market for Airbnb (Warren, 2023). The profit model of Airbnb is closely aligned with the Australian market, which has led it to gradually occupy a large number of short-term leasing markets in Australia in recent years. However, behind Airbnb’s huge success, a controversial issue cannot be ignored: Has Airbnb’s invasion of the Australian leasing market triggered a more serious leasing crisis? This article will study the impact of Airbnb’s expansion in the long-term leasing market in Australia, and analyze solutions to promote sustainable development of the sharing economy in the traditional leasing industry.

Handwriting Text Sharing Loading. Concept meaning Forecasting the future event” by is licensed under CC BY 2.0.

How has Airbnb exacerbated rental issues in Australia?

While the root cause of the rental problem may involve a number of factors, Airbnb does have some influence on the rental market in Australia. As a company whose primary business is short-term rentals, Airbnb’s involvement in the short-term rental market has had a significant impact, particularly in terms of the number of long-term housing rentals and rents (Krause & Aschwanden, 2020). To begin with, the commercialization of rental housing operations, represented by Airbnb, has increased competition in the market. A report on Airbnb investments suggests that, particularly in tourist hotspots, Airbnb investments are likely to generate higher returns than long-term rentals (Warren, 2023). In other words, housing resources in many parts of Australia could join as part of airbnb’s investment, which would trigger more intense competition within the rental market for higher rental margins. Moreover, one of the reasons that has led to a reduction in the supply of long-term housing in some Australian markets is Airbnb’s involvement in the short-term rental market. Nicole Guran, a professor of urban and regional planning at the University of Sydney, noted that in some areas, such as Byron Bay, 17.6 percent of the entire housing stock is listed on Airbnb, which equates to nearly half of the rental housing in the area (Adcock, 2022). This means that Airbnb’s expansion has compressed the local long-term rental market, resulting in fewer properties available for long-term rentals. Furthermore, the reduced supply in the long-term rental market can lead to higher rents, which can lead to more serious rental problems. Professor Guran points out that rental markets become tight due to an increase in short-term rentals, and in a tight rental market, both rents and home prices can rise (Adcock, 2022). This phenomenon is driven by supply and demand; if there are fewer options available in the long-term rental market, such as when landlords use their homes for short-term rentals rather than long-term rentals, then long-term tenants with higher demand face fewer options. Accordingly, with more demand and less supply, landlords will have the initiative to raise rents. Overall, Airbnb’s occupation of short-term rental resources in several areas of Australia has not only changed the supply and demand of the housing rental market, but has also had an impact on the stability of the long-term rental market, and has been one of the contributing factors to the problems of rising rents and lack of housing supply.

Airbnb Office” by Open Grid Scheduler / Grid Engine is marked with CC0 2.0.

Perhaps Airbnb is still bringing benefits to the society?

Although Airbnb is responsible for the problems in the rental market in Australia, there are still some people who believe that the benefits that Airbnb’s growth has brought to the community are able to overshadow its negative effects. Firstly, one possible view is that Airbnb has boosted the tourism industry. Airbnb has fundamentally changed the way of travel, letting more people do not have to worry about the heavy cost from booking hotels (Daly, 2023). This view emphasizes the benefits of making full use of idle resources under the sharing economy model, where hosts act as producers and provide products or services to consumers at a lower cost, reducing waste of resources while benefiting both parties. However, it is precisely because of the benefits that more property owners choose to use their homes for Airbnb short-term rentals rather than long-term rentals, leading to the worsening of the aforementioned housing rental problem. Secondly, Airbnb provides more opportunities for landlords to gain additional income. The flexibility of the sharing economy allows any type of idle resource to be traded for profit (John, 2017). Airbnb plays as a real-world case for proving this point of view. For example, landlords can not only use their properties for short-term rentals, but also provide a variety of services for additional income during their idle time. However, this flexibility has sparked fierce competition in the home rental market, making traditional long-term rentals uncompetitive. When Airbnb offers hosts the opportunity to earn income in addition to rent, more homeowners will choose to use their properties for short-term rentals rather than long-term rentals. Thirdly, Airbnb believes that the short-term rentals they occupy only represent a small portion of the rentals market. Michael Crosby, Airbnb’s Head of Co-Policy for Australia, pointed that Airbnb’s small share of short-term house rentals should not responsible for Australia’s housing crisis (Daly, 2023). However, this view is clearly one-sided. The housing shortage, especially in tourist cities like Port Douglas, provides a strong rebuttal to this claim. As more landlords put their property resources into Airbnb to share in Port Douglas’ tourism profits, the already limited housing resources are unable to meet local market demand (Adcock, 2022). Professor Guran points out that while short-term vacation rentals are not the sole cause of the housing crisis, they do exacerbate the housing shortage that already exists in some areas (Daly, 2023). Overall, while pursuing the benefits of the sharing economy, it is crucial to weigh the negatives behind them. While Airbnb brings certain benefits to society, these benefits cannot mask the more complex issue of housing rentals behind it.

The Airbnb app on a smartphone screen” by Focal Foto is licensed under CC BY 2.0.

Preserving the Original Intent of the Sharing Economy: Potential Measures by the Australian Government Regarding Airbnb

In order to ensure that the development of the sharing economy does not jeopardize the long-term interests of society, the Government needs to play a moderating role to balance the housing rental market under the new economic model. Although Airbnb was originally designed to use unused listings to provide profits for hosts and accommodation for travelers, its expansion has resulted in the majority of its listings no longer meeting the definition of “idle resources” in the sharing economy, contrary to the original concept of the sharing economy (Tulloch, 2023). There are a number of possible decisions that the Australian government could take to directly mitigate the current tensions in the rental market. Firstly, raising the standard conditions for listings on Airbnb could reduce the diversion of long-term rental resources to the short-term rental market. By taking this measure, the government could not only improve the quality of listings or services on the Airbnb platform, but also control the rate at which housing resources flow into Airbnb, thereby avoiding a housing shortage in the short term. Besides, fierce competition in the short-term rental market can be effectively counteracted by introducing policies to limit the number of days a property can be rented out on short-term rental platforms. For example, Melbourne will likely adopt a strategy similar to that of London and San Francisco by imposing a limited number of days rental caps on Airbnb hosts (Daly, 2023). From a landlord’s perspective, such a measure would force them to reassess the profitability of short-term and long-term rentals, and thus decide whether to keep their properties in the long-term rental market. In addition, the government can adjust its tax policy on short-term rentals by incorporating data analysis to moderate the market. For landlords, the choice of rental strategy is likely to depend on which is more profitable, and Airbnb typically offers more profitable short-term rental opportunities (Krause & Aschwanden, 2020). In this case, macro-regulation through tax policy can go some way to balancing the yields of long-term and short-term housing rentals, thus avoiding a tilt of the housing stock in one direction or the other. In other words, balancing the supply and demand of housing stock and tenants through tax policy can help maintain the stability of the housing rental market.

Open Book Policy

Open Book Policy” by Alex Proimos is marked with CC BY 2.0.


With the progressing of sharing economy, Airbnb’s expansion in Australia poses a challenge to the traditional housing rental industry, despite some of the benefits it has brought. However, through strong policy measures, the government can achieve a balance in the rental market within the era of the sharing economy that promotes the development of new economic models while safeguarding the rights and interests of long-term tenants and landlords, and ensuring the stability and sustainability of the housing market.

Reference lists:

Adcock, B. (2022). Taking stock: How has 10 years of Airbnb changed Australia?. The Guardian.

Daly, N. (2023). Short-term rentals are often blamed for exacerbating the housing crisis. now the regulation is catching up. ABC News.

Harendra, N. (2019). Sharing economy: How will it affect traditional businesses?. ValueNotes Strategic Intelligence.

John, N. A. (2017). Sharing Economies. In The age of sharing (pp. 43–63). Polity.

Krause, A., & Aschwanden, G. (2020). To Airbnb? Factors Impacting Short-Term Leasing Preference. The Journal of Real Estate Research, 42(2), 261–284.

Tulloch, L. (2023). Airbnb has lost its way. even the chief executive agrees. The Sydney Morning Herald.

Warren, B. (2023). Is Airbnb property a good investment in Australia?. Property Update.