Growth in non‑hosted short‑term rentals could contribute to rising housing costs
Australia’s short‑term rental accommodation (STRA) market is moving further away from its original “sharing economy” model and towards a more professional, investment‑driven sector, new analysis from the Australian Housing and Urban Research Institute (AHURI) has indicated.
The research, led by Monash University, links this shift to broader housing affordability pressures that are prompting policymakers to reassess the role of STRA in local housing markets.
“Short-stay rentals are shown to contribute to rising housing costs in areas with a high density of this type of accommodation, and policymakers need to understand the sector's evolving dynamics to address this,” said Michaela Lang, research fellow at Monash University.
Using web‑scraped Airbnb data from 2019 and 2023, the study found a marked decline in listings where the host lives on‑site or temporarily vacates the dwelling (“hosted STRA”). These listings fell to 50,166, representing 23,544 fewer properties over the period.
At the same time, listings for entire dwellings available for at least 90 days a year (“non‑hosted STRA”) increased to 69,527. According to the research, this growth equates to a further 8,822 properties that may otherwise have been available as long‑term rentals.
“There are now more listings for entire homes than there are for hosted rentals, which is a shift away from the original premise of platforms like Airbnb for property owners to host visitors in spare rooms,” Lang (pictured right) said.
For mortgage professionals, the trend suggests a growing cohort of borrowers whose investment strategies rely on short‑term letting income, especially in tourist‑driven regional markets. This may have implications for serviceability, risk assessment and portfolio concentration in certain postcodes.
Regional concentration and post‑COVID patterns
The AHURI report found that non‑hosted STRA is increasingly concentrated in regional tourist destinations, while growth in capital cities has been slower or, in some cases, has reversed since 2019. The researchers linked this pattern in part to behavioural changes following COVID‑19 lockdowns, which dampened demand for urban STRA and boosted regional and coastal demand.
The report also highlights a shift in the profile of STRA landlords. Between 2019 and 2023, the number of operators with a single listing fell by 25% to 55,333. Over the same period, the number of operators with 11 or more listings rose by 27% to 885.
“This indicates a rise in professional property managers listing on behalf of owners and may also suggest that owners hold larger portfolios,” Lang pointed out. “Both trends reflect greater professionalisation.”
Light regulatory settings and uneven compliance
The research describes Australia’s STRA regime as lightly regulated by international standards, with a mix of state and territory rules applied inconsistently across the country.
“Among current regulations, three of the states and territories have levies on short-term rentals, and two have registration requirements,” Lang said. “Nightly caps apply only in certain areas of New South Wales and only Tasmania requires platforms to share data.”
The report notes that levies introduced in New South Wales, Victoria and the ACT may encourage some landlords to withdraw from STRA, while others may seek to recover costs through higher nightly rates. Interviews with local government representatives, together with earlier studies, suggest that where rules do exist, adherence can be weak.
“Research we canvassed suggested more than 20% of non-hosted short-term rentals in Sydney and Byron Shire have exceeded regulations capping the nights they could be booked annually,” Lang added.
Inconsistent regulation and patchy compliance may create additional uncertainty for lenders when assessing income stability from STRA‑backed investment plans, especially in jurisdictions where new or tighter rules are being considered.
Host perspectives: more work, higher returns
As part of the project, the researchers interviewed STRA owners and representatives, and added attitude‑based questions to the Property Investment Professionals of Australia’s 2024 investor survey.
“What emerged was a belief that short-term rental is more work but also more profitable, and maximising profit was often the primary incentive,” Lang shared. “For some landlords, social considerations were also important, such as the ability to meet people, host them, and provide them with a great experience.”
The emphasis on higher gross returns, even with increased workload and operational risk, may influence investor demand for STRA‑suitable properties and shape the types of loans brokers are asked to arrange, particularly in high‑tourism areas.
Policy options and data needs
The researchers propose several policy responses aimed at providing more consistent oversight of STRA at national and local levels. These include a standardised national definition of STRA and enhanced data collection so that local councils and regulators can track activity and enforce rules more effectively.
Insights from improved data should be available to local governments to support targeted compliance and planning decisions, the report also notes.
"Accurate data is key to effective policy, which could be achieved by mandatory registration and proactive compliance checks,” Lang said.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
