Designing regulation fit for the short-term rental sector

A holistic AHURI investigation into Australia’s short-term rental accommodation (STRA) sector sheds new light on what it takes to effectively regulate the sector.

Lead researcher Professor Nicole Gurran, from the University of Sydney, said designing effective regulation had to start with understanding the sector — its size, makeup, impacts, provider motivations, and how well existing regulation had worked.

A country-wide analysis revealed the STRA sector grew more than 10% between December 2022 and December 2024, reaching 174,558 listings. About 84% of listings were for whole-properties and the largest growth was seen in un-hosted properties.

The sector was also revealed to be highly professionalised: in December 2023, about 43% of Australia's 171,416 Airbnb listings belonged to single-property hosts — the remaining 98,384 were controlled by just 18,187 entities.

The study confirmed high concentrations of STRA drove up rents and house prices, and a geographic analysis of Sydney, the NSW South Coast and Tasmania, found substantial impacts of STRA on high-tourist areas.

“In December 2024 in Hobart, STRA whole-property listings outnumbered long-term rental vacancies 36 to one, while Shoalhaven on NSW’s South Coast had over 25 STRA whole-properties for every rental vacancy,” Professor Gurran said.

While STRA owners were assumed to be motivated by higher returns, interviews with providers and other stakeholders revealed a more complex picture.

"Metropolitan owners were more likely chasing returns, while many regional providers wanted to offset costs of a second property, or sought non-financial benefits like property maintenance, while still being able to access the home for their own use,” Professor Gurran said.

“Understanding motives is important for policy setting, as restricting STRA may not be sufficient to convert holiday homes into long-term rentals.”

Client type also varied geographically: coastal properties attracted mainly tourists, while properties near urban centres housed students, project-based workers, hospital visitors and relocators.

"STRA was also used as emergency accommodation, with demand spiking after natural disasters — suggesting a flexible short-term rental sector could offer social and economic benefits beyond tourism," Professor Gurran said. “However, we currently lack systems for local service providers to easily access STRA in an efficient and consistent way when disaster strikes.”
 

Designing effective regulation

Australia has been slow to respond to STRA platforms’ growth compared to Europe and North America but recent interventions in WA, Victoria, Tasmania and NSW offered opportunities to monitor impacts.

In Hobart, despite local council efforts, a statewide permit system, mandatory platform reporting and incentives to convert STRA back to long-term rentals, researchers found the lack of a robust legal framework resulted in loss of long-term rentals. In metropolitan NSW, registration requirements and a 180-night limit on un-hosted STRA had not addressed tensions between the short- and long-term rental sectors.

Professor Gurran said analysis of practice domestically and internationally revealed effective regulation required:

• compelling platforms to share reliable and timely data to monitor STRA activity and market impacts
• enforcing existing regulations through platform reporting, user-based registration and well-resourced compliance mechanisms
• protecting long-term rental supply by restricting home conversions to STRA, or offsetting losses, for example by directing levy revenues to affordable housing
• policies recognising key tourism locations appropriate for unrestricted STRA
• financial tools (such as taxes or levies) applied equally to all accommodation providers to fund the infrastructure and services burdens associated with short-term visitors and discourage STRA relative to long-term rentals.

Professor Gurran said all levels of government had a role to play.

“The Federal Government can reduce rental market impacts of STRA through national housing policy, taxation and housing assistance. State and territory governments can support STRA registration, land use regulations and renter protections, while enabling local governments to respond to specific community and market impacts.”

The research was undertaken for AHURI by researchers from University of Sydney, University of NSW and University College Dublin.