Short-term rentals are changing the game for Sydney’s property market. Platforms like Airbnb have made it easier for property owners to tap into the $8 billion Australian tourism market, but this growth comes with both opportunities and challenges.
The Positive Impact of Airbnb
Higher Returns for Owners
A well-located short-term rental in Sydney can earn 30–40% more income annually than traditional long-term leases. Suburbs like Bondi, Manly, and the CBD are consistently among Airbnb’s most booked locations.
Flexibility in Property Use
Homeowners can switch between personal use and renting, offering unmatched flexibility. This is particularly appealing in holiday seasons when demand surges.
The Challenges of Short-Term Rentals
Regulatory Changes
In 2024, the NSW government implemented new caps on short-term rental days (180 nights/year in most areas). Property owners now face additional compliance requirements and fines for overstepping limits.
Impact on Long-Term Rentals
With 5,000 Sydney properties removed from the long-term rental market for Airbnb, vacancy rates have dropped, and rents have climbed by 10% in the past year.
Higher Operating Costs
Managing a short-term rental comes with hidden costs: cleaning fees, furnishing expenses, and platform commissions can eat into profits.
What Does This Mean for Investors?
While short-term rentals can be highly lucrative in tourism-heavy areas, stricter regulations make them less predictable. Investors should evaluate both income potential and legal risks before committing to this strategy.