Short-term rental investments in 2025: still worth it?

For years, short-term rental (STR) investments have been seen as one of the most attractive ways to build wealth from property. But lately, headlines have painted a gloomier picture with talk of an “Airbnb collapse,” stricter rules, and tougher competition.

So, is buying a short-term rental property still a good idea in 2025? The short answer is yes. But success looks different now. Here’s why the market remains stable, what’s changed for investors, and how you can make it work for you with professional short-term rental management.

The myth of the “dying” short-term rental market

It’s easy to believe STRs are in trouble. Media reports highlight rising competition and government crackdowns, causing hosts to be worried about covering their mortgage costs. 

At the same time, thousands of new listings across popular markets have made visibility tougher. More supply means hosts can no longer rely on easy profits.

But this doesn’t mean the market is collapsing. Instead, it’s maturing. Like any industry, growth has shifted from a gold rush to a more professional, quality-driven stage. Properties that are well managed, priced intelligently, and compliant with local rules are still performing strongly. Investors who treat STRs as real businesses, rather than hobbies, are the ones who see consistent income.

Why STR and Airbnb investments are still profitable

There are many reasons why STR and Airbnb investing look healthier than headlines suggest:

• Demand is resilient: Tourism and business travel in Australia are both on the rise. Sydney hosted 3.6 million overseas travellers and 3.2 million domestic visitors in the year to March 2025, while Brisbane’s STRs added $12.1 billion to the local economy in June 2024. Even mid-sized cities like Adelaide and Hobart are reporting occupancy rates of 70% or more in 2024, showing promising trends for 2025.
• Events fuel growth: From the AFL Grand Final to the Australian Open, Formula 1, and Brisbane’s upcoming 2032 Olympics, events deliver surges in bookings and higher nightly rates. Investors positioned in these cities benefit from this demand.
• The industry is professionalising: Airbnb removed 100,000 underperforming listings in 2024 to improve guest trust. That move lifted quality standards across the board, rewarding owners who take their properties seriously.
• Better tools than ever: Revenue management systems, dynamic pricing software, and professional property managers give investors more control and confidence over returns. ROI can now be projected with more accuracy than ever before.

For investors, this means while the game has changed, the opportunity is still there if you play it smart.

What to consider before buying a short-term rental property

If you’re weighing up an Airbnb investment in 2025, here are the main factors to review:

Location

Proximity to demand drivers is key. Inner-city apartments near transport hubs, coastal homes by the beach, or properties close to event precincts consistently outperform. For example, a two-bedroom unit within walking distance of Sydney’s CBD will capture both holiday and corporate travellers, while a family home near Surfers Paradise is more likely to appeal to longer holiday stays.

To compare cities in detail, see our guide on the best places to invest in short-term rentals.

Regulations and costs

Rules vary by state and council. Some areas require permits, cap the number of nights you can host, or enforce stricter safety standards. 

This includes new Airbnb rules such as:

• 180-day cap in NSW: In Greater Sydney and other designated NSW areas, non-hosted STRs are capped at 180 nights per year.
• 60-day cap in Byron Shire, NSW: From 23 September 2024, non-hosted short-term rentals in most of Byron Shire are limited to 60 nights per year.
• New short-stay levy in Victoria: From 1 January 2025, Victoria will impose a 7.5% levy on short-stay accommodation bookings under 28 days (excluding primary residences, hotels, and motels) and empower local councils to regulate or cap short-stay listings.
• Local council powers & increased regulation: Legislation is being developed to increase the authority of local councils and owners’ corporations to ban or limit STRs in specific areas. For example, strata schemes in NSW can adopt by-laws to prohibit non-hosted STRs, and new rules require owners of non-hosted units to get approval from their Owners Corporation under certain conditions.

On top of that, you need to consider:

• land tax,
• short-term rental insurance costs, and
• short-term rental furnishing and Airbnb set-up expenses.

A well-prepared budget that includes these ongoing costs is vital before purchasing.

Property type and amenities

Investors often ask whether one-bedroom or two-bedroom homes deliver the best ROI. The answer depends on your market:

• In busy city centres, smaller one-bedroom apartments with modern amenities often book well with business travellers.
• In family-friendly areas, two or three-bedroom homes with a garden, pool, or parking can command higher rates.
• Unique property features, like a balcony with a view, a hot tub, or a design-led interior, can set a property apart in crowded markets.

Returns vs. long-term rentals

In many cities, STRs still outperform long-term rentals on a revenue-per-night basis. The dynamic pricing model of STRs means you can bring in higher nightly rates than LTRs, with the potential to increase your overall income.

However, STRs require more management. There’s guest turnover, cleaning, and pricing strategy to think about. Without good systems in place, some investors find their margins eaten up by inefficiencies. This is where professional support can bridge the gap.

The value of professional STR management

In today’s competitive STR market, self-managing isn’t always enough. Poor Airbnb pricing, weak photography, or slow guest communication can drag down earnings. 

This is where Hometime makes a difference. Here’s what separates our services from other property managers: 

• Specialised revenue management team: Our team combines pricing tools with advanced internal data to optimise nightly rates and maximise revenue. They adjust pricing as needed to keep occupancy strong during seasonal swings and off-peak periods.
• Listing optimisation: We manage professional Airbnb photography, styling advice, and listing copy to showcase each property’s strengths and improve visibility on booking platforms.
• Guest management: From fast responses to thoughtful touches, we deliver five-star service that drives positive reviews and repeat bookings.
• Local hosting: Our on-the-ground hosts handle check-ins, inspections, and property care so every stay runs smoothly.
• Housekeeping and maintenance: We coordinate professional Airbnb cleaners and trades so homes stay guest-ready and well-maintained.

With Hometime, you don’t just list a property; you run a professional short-term rental business. 

A real-world example: turning a challenge into reliable returns

Take Guy, a homeowner in Mudgee who renovated a run-down cottage with the hope of enjoying it for family getaways while also covering mortgage repayments. After smaller managers didn’t align with his vision, he turned to Hometime. With support from his Local Host, Liss, the property was set up to attract both leisure and working guests, resulting in strong bookings and a reliable income.

As Guy puts it, “I’ve never had a problem that Liss couldn’t handle… it becomes a passive income because I just get a check at the end of each month.”

His story shows how the right management partner can transform a property into both a retreat and a revenue stream.

With Hometime, STRs are a smart investment

STRs can still deliver strong returns in 2025, but they’re no longer a casual side hustle. They work best when treated as long-term, strategic property investments.

The homeowners who succeed are those who:

• select the right market and property type,
• understand local regulations and costs,
• offer amenities and experiences that stand out, and
• partner with a professional STR manager to stay competitive.

If you’re considering buying a short-term rental property or want stronger results from an existing one, Hometime is here to help. Our team can maximise your property’s earning potential while removing the day-to-day hassle of hosting.