Demand is soaring, driven by rapid population growth and sluggish housing supply, while affordability remains out of reach for many Australians. In the middle of this challenge, short-term rentals (STRs) have become an easy political target.
But the evidence tells a different story. STRs make up a very small share of Australia's housing stock, and their impact on affordability and availability is often overstated or misunderstood.
Recent research has begun to unpack these misconceptions, offering a more nuanced and data-driven perspective on the role STRs play in the broader housing landscape.
According to a comprehensive report by Urbis, commissioned by Airbnb, there is no consistent link between the number of STRs in a region and long-term rental vacancy rates or housing affordability. Over 90% of local government areas (LGAs) across Australia had fewer than 5% of homes being used as non-hosted short-term rentals.
Further analysis by the University of Queensland, commissioned by the Queensland Government, reached similar conclusions. The research found that STRs are not a significant determinant of rental affordability.
Even in major cities like Sydney and Melbourne, commercial short-term listings comprise just 1-2% of the rental market - a share too small to meaningfully distort housing availability at scale.
In Victoria, where a 7.5% levy on STRs has been introduced, STRs again account for a small proportion of the overall housing stock. While the levy may generate state revenue, its ability to address housing pressures remains questionable. Instead, the data points to a much larger and more complex challenge - one rooted in fundamental supply constraints, not STRs.
The National Housing Supply and Affordability Council has estimated a shortfall of 37,000 homes in the 2023-24 financial year - highlighting Australia's ongoing failure to build housing at a pace that meets growing demand. At the same time, the Australian Bureau of Statistics reported a net overseas migration of 446,000 in 2023-24, placing further pressure on already stretched housing stock.
Together, these figures highlight the structural imbalance at play: not enough homes are being built to meet demand. STRs are not driving these trends. Rather, they are a reflection of broader investment and tourism dynamics.
Are STR crackdowns missing the mark?
Yet despite this, policymakers across Australia have responded with a patchwork of regulations aimed squarely at the STR sector, often without clear evidence of their effectiveness.
In response to housing affordability concerns, a wave of regulatory measures has emerged across Australia. More than 500 councils now enforce their own policies and restrictions on STRs.
Byron Bay's 60-day cap and Victoria's 7.5% state-wide levy are two recent examples from the past year. Western Australia is rolling out a new STR register, while Sydney imposes a 180-day annual limit. This lack of consistency often creates regulatory confusion, particularly for property managers operating across multiple jurisdictions.
This fragmented approach may deter investment and affect tourism-dependent economies. For example, the Victorian levy has raised questions about who will bear the cost - hosts, guests, or both - and whether it may ultimately reduce bookings. In many cases, these measures appear to do very little to improve rental availability.
That's partly because they rest on a flawed assumption: that all STRs can - and will - be converted into long-term rental stock.
In reality, many STRs, especially those in regional or coastal holiday destinations, are luxury properties that are unsuitable for permanent tenancy. A six-bedroom beachfront home in a remote holiday location, for example, is unlikely to meet the needs of individuals or families seeking affordable urban housing.
Research also indicates that changes in STR regulation do not necessarily shift properties into the long-term rental market. Investors typically have long-term strategies and may simply retain their properties as occasional-use assets or leave them vacant altogether.
What Australia needs is balanced, data-informed policies
Industry bodies and researchers agree that informed, balanced regulation is critical. Registries, reporting tools, and consultation with operators can support transparency and fair compliance.
Organisations such as the Australian Short Term Rental Association (ASTRA) have called for evidence-based approaches that balance the needs of communities, guests, and property owners.
Technology can also support more effective policy. Many hosts and property managers already use software to manage availability, guest communication, and local tax obligations. In a fragmented regulatory landscape, these tools help small operators stay compliant - often with little direct guidance.
Integrating such systems into a national framework could reduce friction, improve enforcement, and lead to better outcomes across the sector.
A unified national policy would give clarity to operators while protecting economic activity in tourism regions. To be effective, state and local governments must work with the industry and ensure decisions are driven by data - not assumptions.
Addressing the housing crisis requires a broader strategy that goes beyond regulating STRs and tackles the real structural issues at play.
Capping or taxing STRs may offer short-term political wins, but without a parallel focus on housing construction, such measures are unlikely to deliver real change. Worse, they risk undermining tourism economies and adding confusion for operators and investors.
What's needed now is a shift in both policy and public dialogue - one that moves past scapegoating and towards a facts-first approach.
Thoughtful, consistent regulation should recognise the role STRs play in housing and tourism, and ensure they contribute in a way that is balanced, informed, and aligned with broader housing goals.
-
About the author
Ethan Brown is the General Manager for the Asia-Pacific region of Hospitable. He first discovered Hospitable as a customer, and his firsthand experience as a host now informs his work helping others streamline their operations, save time, and elevate the guest experience through smart automation.
Initially launched in 2016 as a time-saving PMS, Hospitable has evolved into a powerful toolkit that goes beyond traditional property management. The platform enables hosts at every scale to automate guest messaging with AI, optimise nightly rates, simplify rental agreements and deposits, coordinate teams, and launch direct booking websites with built-in payments and property protection.
Image by Vlada Karpovich on Pexels
