Why It Matters Sharing Economy Accommodation
Summary
We have provided a snapshot of house-sharing platforms patronage in your area.
Definition
Our sharing economy accommodation metric shows you how many properties are listed for rent on home-sharing platforms (HSPs) in your area and how this level of usage compares to the rest of London. The analysis was done on common home sharing platforms including but not limited to HomeAway, VRBO, One Fine Stay, Airbnb etc.
Interpretation
| Dataset | Explanation |
|---|---|
| Number of Entire Homes Available for Rent | This is a quarterly moving average estimation of the number of houses are available for rent via HSPs, in their entirety, in your neighbourhood area. This data is based on the information taken from the last full quarter. |
| Number of Private Rooms Available for Rent | This is a quarterly moving average estimation of the number of private rooms that are available for rent via HSPs, in your neighbourhood area’. This data is based on the information taken from the last full quarter. |
| Number of Shared Rooms Available for Rent | This is a quarterly moving average estimation of the number of shared rooms that are available for rent via HSPs, in your neighbourhood area. This data is based on the information taken from the last full quarter. |
| Total Number of Properties Registered on HSPs | This is a quarterly moving average estimation of the number of the total number of rooms and/or properties that are available for rent via HSPs, in your neighbourhood area. This data is based on the information taken from the last full quarter. |
| Harmonised Score of Total Number of Properties Registered on HSPs | This is a rescaled score based on the London-wide range of Total Number of Properties Registered on home sharing platforms. The rescaled value is found by multiplying each member of a data set by a constant known as “k” so that the harmonised (i.e. rescaled) scores represent a spread between 1 and 100 without changing the nature of the data distribution. The resultant harmonised score makes it very easy to determine whether the Total Number of Properties Registered on HSPs in a neighbourhood area is high as compared to the London average (because it is a number closer to 100) or low relative to the London average because it is a number closer to 0). |
| Quartile of Harmonised Score based on Total Number of Properties Registered on | This shows you which quartile your neighbourhood area’s Total Number of Properties Registered on HSPs score falls within. |
| Average Price of Entire Homes Available for Rent | This shows you the average price of renting out an entire home on sharing platforms for one night in your neighbourhood area. |
| Average Price of Private Rooms Available for Rent | This shows you the average price of renting out a private room on HSP for one night in your neighbourhood area. |
| Average Price of Shared Rooms Available for Rent | This shows you the average price of renting out a shared room on HSPs for one night in your neighbourhood area. |
| Average Price for All Properties Registered on HSP | This shows you the average price of renting any form of accommodation on HSPs for one night in your neighbourhood area. |
| Harmonised Score of Average Price for All Properties Registered on HSP | This is a rescaled score based on the Average Price for All Properties Registered on HSP. The rescaled value is found by multiplying each member of a data set by a constant known as “K” so that the harmonised (i.e. rescaled) scores represent a spread between 1 and 100 without changing the nature of the data distribution. The resultant harmonised score makes it very easy to determine whether the Average Price for All Properties Registered on HSP in a neighbourhood area is high as compared the London average (because it is a number closer to 100) or low relative to the London average because it is a number closer to 0). |
| Quartile of Harmonised Price based on Average Price for all Properties Registered on HSP | This shows you which quartile your neighbourhood area’s Average Price for all Properties Registered on HSP score falls within. |
HSPs is an abbreviation for Home Sharing Platforms.
A “neighbourhood area” is broadly the same size a postcode district such as for example SE1 or W1A or NW3.
The standard four quarters that make up the year are: January, February and March (Q1); April, May and June (Q2); July, August and September (Q3); and October, November and December (Q4).
Why the metric matters from a commercial inhabitant’s perspective
The impact of Home-sharing Platform (HSP) on commercial inhabitants of an area is contested along two main fault lines. Those who see HSP as a force for good insist that the online “home sharing” it facilitates expands the tourism market rather than competing directly with hotels for the same customers and thus areas with greater availability to house tourists will see spill over effects as tourists spend money that would not otherwise have been spent in a neighbourhood. Opponents of this however suggest that HSP listings have a negative impact on local hotel revenue, particularly those at the lower end of the market, hurting established local providers and their employees.
The second debate is focused on HSPs impacts on housing rental supply and affordability. Where HSP listings are at their highest in terms of units of available accommodation, it is hard to deny that this is achieved without lessening the portion of accommodation that would otherwise have been available in London’s rental market, thus lessening the amount of vacant rental stock available for rent as a proportion of the total rental stock. If the equilibrium vacancy rate is the vacancy rate at which there is no upward or downward pressure on rents, where the vacancy rate becomes lower than the equilibrium rate, renters will compete with each other to secure rental property, pushing up rents. If the vacancy rates are higher than the equilibrium rate, there will be downward pressure on rents as landlords reduce rents to ensure their properties do not remain vacant.
Therefore the metric is of concern for commercial inhabitants because when rental vacancy rates are lower than or close to the equilibrium rate, even small changes in rental stock can materially affect rents, given the time taken to construct new housing stock, would constitute a sudden supply shock and lead to upward pressure on local rents.
Why the metric matters from a residential inhabitant’s perspective
The prevalence of short term HSP accommodation is likely to affect the residential inhabitants in one of two ways. Firstly, where a significant portion of a neighbourhood’s rental stock is available for short term rents as is most prevalent with HSPs listings, there is evidence to suggest that noise, nuisance, traffic, parking, and waste management issues may arise. Such issues most often come to a head when larger tourist groups who typically prefer holiday homes or apartments, cause real or perceived increases in the usual noise, traffic and parking-availability levels. In neighbourhoods well acquainted with tourists and the short-term holiday rental of residential homes is an established practice, HSP is unlikely to be an issue that would ordinarily affect residential inhabitants. In higher-density or suburban areas of London that already experience traffic and parking congestion, however, increasing numbers of tourists will likely be resented.
The upside to a being in a neighbourhood with high levels of demand for HSP property is that a sector of the population can readily benefit from HSP income. The main downside however is that where HSP income becomes commonplace within a neighbourhood, there is risk that such income becomes capitalised into house prices, thus forcing them up, undermining any affordability benefits that would have been on offer to aspiring home buyers in these neighbourhoods.
General commentary
The online home-sharing that HSP facilitates is part of a growing range of practices described variously as the “sharing economy”, where people engage in “collaborative consumption” by “borrowing/renting” rather than “buying/selling”. Those who champion the new sharing economy, see it as a force for good. By unlocking latent capacity in existing offices, homes and vehicles through online market places, sharing results in more efficient and sustainable cities, while opening new economic opportunities for individuals and communities.
The counter argument to this is that sharing platforms enable unlicensed (in this case) accommodation providers, who often only have to partially comply with the existing public health and safety standards which would apply to regulated accommodation operators. Tourism industry groups also complain that HSPs such as Airbnb allow individuals to unfairly compete with traditional operators who are required to pay applicable taxes and comply with existing regulations.
Those who oppose an unregulated sharing economy note that unregulated visitor accommodation undermines spatial strategies designed to cluster tourist facilities in particular locations accessible to attractions and related facilities and services. As always, our data seems to show that the truth lies somewhere between the two. Different forms of home sharing imply different impacts for local neighbourhoods and housing markets.
A bed, couch, or mattress in a shared room or even a private room which is offered by a resident ‘host’ should in theory present few concerns for neighbours. The resident ‘host’ is on site to help moderate guest behaviour, and both ‘guests’ and ‘hosts’ rate each other, providing a market place incentive for both sides to operate in a considerate way. When entire residential properties are rented, there is a higher likelihood of there being negative impacts affecting immediate neighbours.
(Photograph: Betty Longbottom, geograph.co.uk)
Trivia
Despite many people believing that Airbnb is the world’s largest accommodation provider, Airbnb owns no real estate of its own.
History
The traditional market for tourism accommodation in London involved a tourist renting rooms from formal businesses, such as hotels. HSPs have shaken up this model by providing an online marketplace that permits the large-scale rental of spaces from one person to another.
The basic model underpinning traditional B&Bs, and the practice of renting one’s residence to tourists undoubtedly dates back to centuries with there being records of eighteenth-century tourists on their Grand Tours through Europe sometimes finding lodging in private homes.
However, sharing economy accommodation had previously been limited by the difficulty hosts faced in making their accommodations known to potential guests, and the challenge of establishing the needed trust between hosts and guests. By making it simple for hosts to post descriptions and photographs of their spaces, communicate with guests, and take reservations and payments, Airbnb and the other HSPs have essentially provided the technological infrastructure through which hosts can easily promote their homes to potential guests.
Moreover, the platforms’ review mechanism encouraged hosts and guests to post public reviews about one another which overcame the “trust hurdle” necessary for widespread adoption of home sharing in London.