Dublin’s coronavirus tourism crisis exposes Airbnb’s impact on rentals
The modern one-bedroom apartment in Dublin featured an open-plan living space, a sunny balcony, solar panels, ample storage space and parking for two cars. The location was ideal, as was the price: about $ 1,800 per month, or $ 300 less than what the previous tenant paid.
In a city where queues to view rental properties regularly hung around the block, new tenants could hardly believe their luck.
“We weren’t going to get this place,” Aoife Brannigan, 25, said of the months of fruitless searches she and her partner, Shaun Gribben, 25, had undertaken before landing in the apartment. “I couldn’t have seen this happen if it hadn’t happened. We took advantage of it 100 percent.
The ‘this’ she was referring to was the coronavirus, which has cooled Ireland’s once-frantic housing market, particularly Airbnb listings, which have been hit by a tourism slump. The drop, along with an exodus of people from overseas leaving Dublin due to the pandemic, has created an increase in available rental properties in the Irish capital – a change that highlights how Airbnb’s presence continues to influence housing prices in popular cities.
For Dublin, the change eased a crisis that in recent years has caused rents to skyrocket and left many struggling to afford housing. The situation was so tense that in February, voters seeking affordable housing and increased tenant rights sent shock waves through the nationwide election by ousting the traditional ruling parties.
When Ms Brannigan and Mr Gribben started their research in earnest at the start of the year, he said: ‘I remember every day I was given around 60 properties – and once it started it literally went double.”
For years, homes rented on Airbnb for short stays have depleted the supply in the Dublin area rental market, from around 1,700 full listings in 2016 to over 4,500 at the start of this year. year just before the coronavirus crisis, according to Inside Airbnb, a site that tracks announcements in cities around the world.
But during the pandemic, that trend reversed, with those registrations dropping to around 3,900 in August, a deceptively small change that had a disproportionate effect. From May to July, long-term rental listings in the city were almost 50% higher than the same period last year – an increase of more than 1,000 rental units – despite a 1.5% drop in the rest of the country, according to a report by Ronan. Lyons, assistant professor of economics at Trinity College Dublin, for the Irish real estate site Daft.ie.
Because they operate on short-term leases, Airbnb listings can flood the rental market in ways that longer-term rentals cannot.
“The Dublin market under normal conditions could easily take 3,000 properties without necessarily blinking,” Lyons said in an interview. Commenting on the recent increase in registrations, he said: “It’s a lot compared to what he’s seen happen. It’s about a month and a half of extra supply that has arrived, and at a time when people are not moving into town.
The Irish government tried to cool the Airbnb market last year, introducing regulations to move short-term rentals to areas where rents are rising rapidly in the long-term market. But without an effective method of enforcement, the effort was largely in vain.
Similar approaches have been taken – with mixed success – in Amsterdam and Paris, which have limited the number of days people can rent their apartments; in Barcelona, which in 2014 fined Airbnb for breaching the rental property rules; and London, where investigations by The Times of London and Wired magazine found that thousands of the site’s listings appeared to violate the city’s limit on short-term rentals.
“Airbnb knowingly allows people to advertise properties that are not legally compliant on the platform,” said Eoin O Broin, spokesperson for Sinn Fein, a left-wing opposition party that has made big gains in the February elections on a platform that included proposals to freeze rents and build 100,000 homes. “And when these properties are leased as they were before the Covid-19 restrictions, and will be thereafter, Airbnb benefits from the violation of the law.”
An Airbnb spokesperson took issue with Inside Airbnb data, saying most hosts around the world plan to rent their units at least to pre-pandemic levels once the coronavirus subsides, and added that the share of bookings in major European cities had recently rebounded.
The company said in a statement last week: “Today there are as many listings for entire homes on Airbnb in Ireland as there were before the pandemic. Travel on Airbnb generated around € 800 million in economic activity for Ireland in 2019 alone and hosts are very focused on how they can help their local communities get back on their feet and foster the safe resumption of tourism.
Homeownership received intense national attention during Ireland’s booming Celtic Tiger years in the 1990s and early 2000s, but the financial crash of 2008 devastated the economy nationwide and put an end to a previously booming housing industry. The Irish economy has gradually recovered, but house prices have catapulted, putting homeownership beyond the reach of most people and locking them into an already tight rental market.
Then came the pandemic, which resulted in a national lockdown in the spring, a 6.1% drop in economic output in the second quarter, and an unemployment rate that in August was measured at 15.4%.
And while some workers have left urban areas as work-from-home practices are in place and some overseas have returned to their home countries during the pandemic, experts attribute much of the blunt increase in listings for long-term rentals in Dublin. in Airbnb listings.
The proof, they say, is that availability has increased in parts of the city where short-term registrations were concentrated – something that has not happened uniformly across the city or across the country.
The change was most pronounced in central Dublin, where investment property owners left the market in the short term. Retired businessman Jim Cryan moved his Dublin Airbnb ad to the long-term rental market at the end of March. Within two and a half weeks, the four bedroom townhouse was rented out.
Mr. Cryan agreed to a lease with a monthly fee of around $ 3,900, half of what he might have expected when the Airbnb market sizzled. Still, he doubts he will return to the market in the short term.
“You are applying common sense to it,” he said. “It’s like you invest in a stock and it crumbles, you are very loath to go back and get burned twice.”
That’s not to say that returning old Airbnb listings to the rental market will solve Dublin’s housing crisis.
“The underlying rental housing shortage is probably at least 50,000 and closer to 70,000 or 80,000 depending on trends over the past two decades,” said Mr. Lyons, professor of economics.
“My concern,” he added, “would be if a politician could look at this and say, ‘Oh, problem solved: Airbnb has collapsed, the European market has collapsed, we have finished all these rental properties and the job is done. ‘”
On the one hand, while rents in Dublin have fallen since the coronavirus hit, the drop overall has been marginal and the last few months have even seen a slight increase.
“The underlying shortage of rental housing in Dublin is very acute,” Mr. Lyons wrote in the report for Daft.ie. And many homeowners are reluctant to rack up long term losses.
“If you reduce your rent now, the rent you set in one, three and 10 years will reflect the reduction you make today,” Mr. Lyons wrote. “So even if landlords are open to haggling ‘at the door’ and offering a month or two of free rent up front to sweeten the deal, they can be very reluctant to point out in an ad that they are actually reducing their rent. rent. “