Is It Crunch Time for Airbnb? What It Means for Property Investors

It seems the tide is turning for short-term rentals like Airbnb and Stayz across Australia.

And if you’re a property investor, or considering becoming one, this shift is worth paying attention to.

We’ve long known that short-stay accommodation platforms have disrupted the traditional rental market.

In recent years, they’ve become particularly attractive for property owners chasing higher returns.

But as with all cycles, what goes up eventually meets resistance—and that’s what we’re seeing now, especially in light of new regulations, insurance constraints, and local community backlash.

We’re now seeing a shift to taking properties off Airbnb and putting them back on the long term rental market.

From money-maker to pressure point

For a while, listing on Airbnb seemed like a no-brainer.

You could potentially earn two or three times what a long-term tenant would pay, and you could still reserve time to use the property yourself.

The model worked, particularly in lifestyle destinations and inner-city areas frequented by tourists and business travellers.

But the pendulum is swinging.

Councils and state governments are increasingly tightening the screws on short-term rental accommodation.

Their reasoning?

A growing housing shortage and sky-high rents for long-term tenants.

The logic goes: if homes weren’t being used as mini-hotels, more would be available for locals to rent.

And while the evidence on this is mixed, perception is a powerful driver of policy.

So we’re seeing restrictions and higher taxes in areas like:

• NSW: A 180-day cap in Greater Sydney, and new planning proposals in regional towns.

• Victoria: Melbourne City Council’s proposal to limit short-stay nights to just 180 annually.

• Queensland: Proposed increased council rates and regulation of short-term use in apartment complexes.

Note: The message is clear—regulators want to nudge investors back into the long-term rental market.

Short-term, short-sighted?

Now, at Metropole we’ve never been fans of chasing quick wins or speculative strategies.

Sure, some investors have done well out of Airbnb-style properties, but many are now finding the model less sustainable.

Why?

• Increased compliance: Local councils are now requiring registration, planning approvals, and detailed fire and safety checks.

• Higher holding costs: Insurance premiums are rising for short-stay properties, and some strata bylaws are blocking them altogether.

• Volatile income: Unlike a traditional tenancy agreement, Airbnb income can fluctuate dramatically depending on seasonality, competition, and economic conditions (remember how COVID gutted tourism practically overnight?).

Short-term rental properties can be more like running a small business than a passive investment.

That’s fine if you’re prepared for the work, but it’s not everyone’s cup of tea.

What does this mean for investors?

Let’s bring this home to you as a strategic investor: What do these changes mean?

1. Yield compression ahead

As compliance costs rise and regulation tightens, the once-lucrative returns from short-stay platforms will come under pressure.

Expect the yield gap between short-term and long-term rentals to narrow, especially after taxes, fees, and vacancies are considered.

2. A return to fundamentals

In uncertain times, solid, long-term investment fundamentals win.

That means owning well-located properties in areas with strong owner-occupier appeal, tight vacancy rates, and long-term capital growth prospects.

Chasing high Airbnb returns in secondary locations is becoming riskier by the day.

3. A changing tenant profile

Interestingly, many Airbnb owners are now flipping back to the long-term rental market.

Cotality’s data shows a spike in rental listings in key regions that previously had high short-stay volumes.

This is good news for tenants, but it also means more competition for landlords, so you’ll want to ensure your property stands out.

4. Asset strategy reassessment

If you own an Airbnb, now’s the time to evaluate whether it’s still worth it.

Do the numbers stack up after accounting for new costs and rules?

If not, consider transitioning to a long-term lease or even divesting and reallocating into more strategic assets.

So, is it the end of Airbnb?

Not quite.

There will always be a niche for short-stay accommodation, especially in tourism hotspots.

But it’s no longer the easy cash cow it once appeared to be.

Governments, neighbours, and even insurers are taking a tougher stance.

And while the media loves a dramatic headline, the reality is more nuanced—Airbnb isn’t collapsing, but it’s evolving under pressure.

As always, savvy investors adapt.

They see beyond the short-term noise and stay focused on long-term wealth creation.

Final thoughts

At Metropole, we’ve always advocated for strategic investing, not speculative gambling.

The recent scrutiny on Airbnb should serve as a reminder: building wealth through property isn’t about the latest fad or loophole—it’s about owning the right assets, in the right locations, with the right strategy.

If you’re uncertain about your current property or how to pivot your portfolio in light of these changes, now’s a great time for a strategic review.

Let’s make sure your investments are working as hard as you are.

About Leanne Jopson
Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years’ experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.