Sydney’s Airbnb market is in freefall, with a dramatic exodus of short-term rental properties reshaping the city’s accommodation landscape.
But while this might signal a glimmer of hope for long-term renters in the harbour city, it’s simultaneously fuelling a housing catastrophe in regional Australia, where a relentless “holiday gold rush” by investors is pushing local communities to breaking point.
According to a report by the Australian Housing and Urban Research Institute, Sydney has witnessed a staggering 48.3 per cent drop in Airbnb listings since 2019.
Melbourne isn’t far behind, experiencing a significant 23.8 per cent decline.
The mass exodus has been largely attributed to property owners pivoting to more stable, long-term leases, as the profitability and demanding workload of urban short-term rentals become less attractive.
However, the story takes a grim turn beyond the city limits.
MORE NEWS
‘Ruined for life’: Expat’s viral praise for Australia
‘Sad’: Block couple sell own home amid financial limbo
Aus beats EU in shock housing study
Airbnb accommodation in Sydney has rapidly declined since the COVID-19 pandemic.
In stark contrast to the urban decline, popular regional tourism hotspots like Queensland’s Whitsundays, Victoria’s Mornington Peninsula, and South Australia’s Barossa Valley have seen an average 27 per cent surge in Airbnb listings.
Monash University researcher and the report’s author Michaela Lang, minces no words about the financial incentive driving this crisis.
“It seems in some regional areas, short-term rental accommodation is very highly profitable compared to long-term rentals,” he told The Financial Review.
The AHURI report also warns that while tourism offers benefits, the unchecked proliferation of short-term rentals is actively driving up long-term rental costs, displacing residents, straining local infrastructure, and creating significant social pressures.
“In some small towns or suburbs of those peri-urban areas, it’s getting to be very high numbers, then that’s where you get a real crisis of housing affordability and availability,” Lang told The Financial Review.
MORE NEWS: ‘Unsafe’: Shocking jail images fuel housing debate
The mass exodus has been largely attributed to property owners pivoting to more stable, long-term leases.
“Businesses do well out of attracting more tourists to the area, but if you hit a density where there is no affordable housing for your staff, that, in turn, is then also creating a crisis for businesses.”
International data provider AirDNA confirms this alarming trend, highlighting the “explosion” in Australia’s short-term rental markets and identifying regional areas as the most profitable. Their 2025 analytics reveal the Whitsunday region boasts the highest potential annual revenue per room at an eye-watering $141,372, based on an average room rate of $602.
Other top earners include Singleton, NSW ($115,783), Exmouth, WA ($101,976), Cessnock, NSW ($96,621), and Byron Bay, NSW ($95,004).
Homes in the Whitsundays generate the highest amount of short-term rental revenue in Australia.
The AHURI analysis also points to a disturbing commercialisation of the short-term rental market. The number of properties listed by owners not living in the home has jumped from 45 per cent in 2019 to 58 per cent in 2023 – a far cry from Airbnb’s original pitch of sharing spare rooms.
While 83 per cent of short-stay owners have only one property, there’s a growing trend of commercial operators or third-party managers listing eight or more homes, further professionalising and expanding the holiday rental sector.
English (US) · 