Do short-term rentals hurt the long-term market?

“Why rent it for $550 a week when I could Airbnb it for $250 a night?”

If you work in property management, you’ve definitely heard something like that.

Maybe from an investor at an open home. Maybe from your own landlords.

And sure, the logic checks out…until it doesn’t.

Let’s chat about what’s really going on in the short-term rental boom, and why long-term rental agents (like you) are stuck cleaning up the mess.

Yep, it’s happening – and the numbers are getting hard to ignore

A growing number of Aussie investors are pulling out of the long-term market to chase quick cash from holiday lets.

In fact, a 2024 study by Grounded Community Land Trust Advocacy found that in the Whitsundays, Airbnb hosts were pulling in a median annual gross income of $131,000 – with net income sitting around $85,475. That’s a massive 80%+ more than what a long-term lease would typically generate for the same property (realestate.com).

That’s a big chunk of the housing taken off the long-term market.

“But Airbnb says it’s not a problem…”

Right…Airbnb’s 2023-24 Urbis report claimed STRs only account for 1-2% of housing nationally, and don’t significantly affect rents or supply (Airbnb Newsroom).

But independent researchers – like Professor Nicole Gurran at the University of Sydney – argue otherwise. She points to “strong evidence” that STRs do reduce availability and raise prices, especially in regional and lifestyle suburbs (ABC News).

Her take? In areas where councils have capped or banned STRs, rents have stabilised.

Draw your own conclusions…

For property managers, the impact is real

When an owner pulls their property out of your portfolio to “go Airbnb,” you don’t just lose management fees. You also lose:

• A stable management
• A consistent tenant
• A known revenue stream
• And sometimes…the property for good

Then, six months later, they return – burnout from managing bookings, cleaners and complaints – and the property is:

• Non-compliant
• Priced too high
• Missed long-term tenant interest

You’re left trying to re-lease a ghost listing with outdated photos and flaky electricals. Fun!

So, how do you handle it?

Honestly? With patience and a few solid facts.

Here’s what works in the real world:

1. Show the numbers – real numbers

Gross income doesn’t equal net profit.

Reapit gives you access to analytics that show actual income, vacancy rates and arrears. Use it.

2. Mention compliance…gently

Short-term doesn’t mean no rules.

In fact, it often means more.

• Victoria’s introducing a 7.5% short stay levy from Jan 2025 (State Revenue Office Victoria)
• Councils like Byron Bay are capping non-hosted STRs at 60 nights per year (NSW Government)
• Some strata buildings now allow 75% of owners to vote to ban STRs entirely (AFS Bendigo)

These are real shifts. Best to be across them before an owner’s holiday-rental dreams hit red tape.

3. Offer alternatives

Some owners want flexibility.

Offer:

• Mid-term leases (3-6 months)
• Furnished long-term options
• Corporate rentals

You keep the listing, they still get premium returns.

And tenants? They’re feeling the squeeze

In high-demand areas where long-term stock has shrunk – often because of a spike in short-term listings – tenants are under pressure.

And when rent is up, competition is fierce and options are limited, even small issues like bond deductions or delayed repairs can feel bigger than they are.

That stress often lands squarely on your team.

It’s not that STRs directly cause more complaints or maintenance requests. But in regions where long-term renting has become harder, every touchpoint matters more.

Short-term rentals aren’t the enemy. But they do pull at the fabric of the long-term rental market.

And while some owners chase quick returns, it’s up to you – the property manager – to be the voice of reason.

Not to lecture them. Not to scare them. Just to show them the full picture.

Because at the end of the day, it’s not about nightly rates.

It’s about trust. Longevity. Stability.

And that’s what long-term property management still delivers best.

STR vs LTR: How do they really compare?

Not every property is suited to a short-term strategy. And not every investor has the time (or patience) to be a host.

Use the chart below to help your landlords weigh up the pros and cons of each approach – from income to involvement, compliance and risk.

Because better decisions start with a clearer picture.