The Global (and NZ) Market Landscape

The sharing economy’s growth trajectory is nothing short of extraordinary. In 2023, its global market value reached approximately USD 150 billion. According to "Reports and Insights" (2023), this market is projected to skyrocket to USD 794 billion by 2031, representing a robust compound annual growth rate (CAGR) of 32%.

The sharing/person to person economy in New Zealand encompasses a wide range platforms, including Airbnb, Uber, Camplify, and a variety of financial lending and tradesman-type services. The accommodation-sharing sector alone generated NZ$550 million in gross revenue in the year ending March 2018 (sorry, i dont have any reliable data after that point due to changes to the data collection methods, but hopefully this will change soon), representing approximately 12% of the accommodation industry's total revenue. Peer-to-peer financial lending platforms had over 34,000 registered investors as of June 2020, totaling NZ$624 million. Ride-sharing and gig economy services (Gig economy encompasses short-term contracts, freelance work, and independent, flexible job opportunities, rather than traditional, long-term employment. Workers in the gig economy typically operate as independent contractors or freelancers and often source work through digital platforms), though harder to quantify, contribute significantly to the economy, providing flexible earning opportunities and accessible services. With rapid growth and diversification, the sharing economy is an increasingly vital part of New Zealand’s economic fabric. Its important to note that this model works from a grass roots up perspective rather than from a top-down method, which puts the power back into the hands of everyday kiwis. Several factors are driving this exponential growth:

1. Technological Advancements

The advancement of digital platforms and mobile apps has been pivotal. Platforms like Airbnb, Uber, and TaskRabbit have made asset-sharing seamless and convenient, and helped breakdown misconceptions and mental barriers to renting or sharing personal belongings. Over time, more "off the shelf" website builders like WIX, Sharespace and Wordpress will develop more flexability with their functionality to enable peer to peer stores, but in the meantime Sharehub developed a custom built platform to meet the specific needs of our users. 

2. Shifting Consumer Preferences

Modern kiwis are increasingly prioritising access over ownership. This paradigm shift is driven by the desire for cost-effectiveness, flexibility and people being fed up with big corporations making unbelievable profits at their expense. Renting or sharing items, whether it’s services (like gardening or personal trainers), or tools and equipment, offers amazing convenience and affordability, while financially benefiting the people using the platforms.

3. Environmental Impact

The sharing economy aligns with sustainability goals by promoting resource optimisation. Sharing assets reduces waste, lowers production demands, and encourages circular economic practices. For environmentally conscious consumers, participation in the sharing economy is both practical and ethical.

Local Insights: The Sharing Economy in New Zealand

New Zealand is mirroring global trends, with the sharing economy becoming an integral part of its economic landscape. Platforms like New Zealand's own Sharehub are at the forefront, providing Kiwis with opportunities to monetise underutilised assets while fostering community connections. From recording and podcast studios (to nurture grassroots creativity) to drills, lawnmowers, baby needs, and earthwork equipment to shared spaces for work and yoga for wellness, the sharing economy is revolutionising how New Zealanders engage with resources.

Key Drivers in New Zealand:

• Digital Penetration: With high internet and smartphone penetration, New Zealanders are well-positioned to adopt sharing platforms.

• Sustainability Goals: New Zealand’s strong focus on environmental preservation resonates with the sharing economy’s ethos.

• Cultural Fit: The sharing economy’s collaborative model aligns with New Zealand’s community-centric values. Likewise, more and more kiwis seem fed up with big corporations making massive profits while they struggle to pay their bills.

Empowering Everyday Kiwis

As the cost of living continues to rise, many everyday Kiwis are becoming disillusioned with big international corporations making massive profits at the expense of the financial and associated mental health concerns of real people. Person-to-person platforms like Sharehub provide a vital alternative by enabling individuals to share and monetise their underutilised assets and their skills, the sharing economy not only fosters a sense of community but also creates new income opportunities for individuals and also contributes significantly to the NZ economy. As an example, AirBNB contributed approx $2.8B to NZ's GDP and provides extra income for approximately 22,000 kiwis.

For many, participation in the sharing economy serves as a gateway to entrepreneurship. It allows Kiwis to start side hustles with minimal upfront investment, generating supplementary income that can grow into a full-time business if planned and executed correctly. For those who have never started or run a business before, sharing platforms offer an accessible way to gain entrepreneurial experience and take steps toward financial independence, breaking free from the traditional "rat race."

By empowering individuals and encouraging resource-sharing, the sharing economy not only alleviates financial pressures but also fosters innovation and self reliance within communities.

Challenges and Opportunities

While the sharing economy’s benefits are undeniable, it faces challenges such as regulatory hurdles, insurance needs, trust and data privacy concerns and many misconceptions.

However, these challenges present opportunities for innovation and collaboration and Sharehub found these interesting challenges to overcome to provide the platform to the community:

• Policy Frameworks: Governments and organisations can work together to establish clear, supportive regulations, particularly around employment classification and tax obligations for casual users.
• Trust and Security: Enhanced user verification systems and transparent policies can address privacy and trust issues.
• Niche Markets: Platforms can tap into underserved niches, such as rural resource-sharing or specialised skills exchange.
• Insurance Adaptation: Insurance companies must adapt to the unique requirements of the sharing economy. Traditional insurance models often fail to adequately support peer-to-peer transactions, leaving participants exposed to risks. I know personally that arranging insurance for users was a key challenge that Sharehub had to overcome (luckily a great insurance broker at Affiliated Insurance helped navigate Sharehub through the process). Developing customised policies that cater to shared assets, and short-term rentals is essential. This presents an opportunity for insurers to innovate and provide products that align with the evolving needs of the sharing economy.
• Misconceptions: One key misconception is that platforms such as AirBNB significantly increase rental and house prices. In reality, analysis by leading New Zealand economic consultancy Infometrics has found that the short-term rental accommodation (STRA) sector has a limited effect on rental prices and no significant effect on house prices across New Zealand’s major urban areas, with population and interest rates having the greatest influence on rents and house prices. “The New Zealand housing market fundamentally suffers from a lack of supply, which has caused house prices and rents to rise over time.”

Focusing on the Auckland, Wellington City, Queenstown-Lakes District, and Christchurch City territorial authorities, an econometric analysis found the main drivers of rental and house price increases are population growth and interest rates.

For example, our analysis for Queenstown-Lakes District found that STRA contributes negligibly to monthly rental price increases, with the average amount being an additional 35c/month. Over the period January 2018 to September 2023, population growth influenced around a $101pw increase in weekly rent, while STRA only influenced $11pw,” says Mr Olsen.