New research has spotlighted the most profitable locations across Australia for property investors tapping into the short-term rental market — and the results may surprise you. While well-known tourist destinations made the list, regional areas are showing especially strong income potential for short-term letting.
Top-Earning Locations for Short-Term Rentals
According to data from AirDNA, the Whitsundays in Queensland tops the charts with potential annual earnings of over $141,000. This is followed by Singleton in the NSW Hunter Valley at nearly $116,000, and Exmouth in Western Australia with potential revenues just over $101,000 per year.
Other high-performing areas include coastal favourites like Byron Bay, Kiama, the Gold Coast, and the Tweed, all reporting annual earnings upwards of $86,000. Even Victoria’s Mornington Peninsula made the top 20, with potential yearly income above $74,000.
These figures are based on the highest-performing listings in each area and assume year-round availability, which is not always the case in practice.
Revenue Potential vs. Reality
AirDNA’s chief economist, Jamie Lane, explained that the revenue figures offer a helpful benchmark for comparing very different markets — for instance, a summer-heavy beach rental versus a city unit with stable occupancy. However, these earnings reflect maximum potential, not guaranteed returns.
In the Whitsundays, for example, fewer than 60% of listings are available year-round, which significantly affects actual income. Some locations, such as parts of Byron Shire, also face government restrictions like 60-day annual limits on non-hosted stays. Sydney and other parts of regional NSW have a 180-day cap, and Victoria now charges a 7.5% levy on short-stay bookings.
The Bigger Picture: Tourism vs. Housing Pressure
While the profitability of short-term letting is attractive for investors, there are growing concerns about the impact on local housing markets. Professor Nicole Gurran from the University of Sydney noted that only a small portion of holiday homes generate more income than long-term rentals — and many short-term rentals are luxury properties that don’t reflect average housing costs.
She also pointed out that in areas where there’s high demand for both vacation homes and permanent housing, short-term rentals reduce long-term supply and drive up prices. During events like the COVID-19 pandemic, sudden demand shifts highlighted how fragile housing availability can be in regional communities.
Leo Patterson Ross from the Tenants’ Union of NSW found that while inner-city areas like Bondi show little income difference between rental strategies, regional towns often present much higher earnings for short-term lets. But this comes at a cost — in some towns, a large share of homes are dedicated to short stays, leaving locals struggling to find permanent housing.
A Call for Balanced Solutions
Industry leaders agree that a balanced approach is needed. Michael Crosby from Airbnb said that short-term rentals make up only 1–2% of the housing stock nationwide, based on research by Urbis. He argued the core issue in the housing crisis remains a lack of supply, not short-term rentals.
Eacham Curry from Stayz echoed this, noting that many short-term rental homes are family-owned holiday properties that wouldn’t enter the long-term market anyway. He emphasized that taxes and caps are unlikely to change that.
Final Thoughts
Short-term rentals continue to be a tempting strategy for investors, especially in scenic and tourist-friendly regional towns. However, these opportunities come with important considerations around housing availability, community needs, and evolving regulations.
For investors looking to enter this space, it’s essential to not only evaluate the earning potential but also stay informed on local laws and the broader impact on the housing market.
