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Victoria’s short-stay accommodation market — once the beneficiary of massive growth after the pandemic — has ground to a halt in 2025. That includes properties listed on platforms like Airbnb and Stayz, where the increase in listings has essentially stopped. This shift has major implications for property owners, investors and guests alike — and is particularly relevant for those involved in short- and long-stay accommodation across Melbourne, the Mornington Peninsula and Victoria’s holiday towns.
🏡 The Numbers: Growth Has Plateaued
According to data shared with The Age by international analytics firm AirDNA, the number of short-stay listings in Victoria barely changed between 2024 and 2025 — averaging about 43,735 properties daily in 2025, compared with 43,738 the year before. This follows a period of strong growth — a 22% jump in 2023 and 12% in 2024 — before the increase flatlined.
That stagnation comes in the first year of Victoria’s new 7.5% short-stay accommodation levy (often dubbed the “Airbnb tax”), which applies to all bookings of fewer than 28 consecutive nights.
💸 Why Growth Has Slowed — Tax? Or Market Cooling?
There’s no clear consensus that the levy itself is the main cause of the slowdown in listings. AirDNA research analyst Linda Rollins explained:
“Some of the listing slowdown we’ve seen in the last few years could be attributed to hosts being deterred by higher tax levies, but it’s more likely the result of slowing demand.”
According to Rollins, demand slowed sharply, from 6% growth in 2024 to just 2% in 2025 — meaning supply now exceeds demand, which in turn has put pressure on occupancy rates and discouraged new hosts from joining the market.
🏠 What the Short-Stay Levy Was Designed to Do
Victoria’s short-stay levy — a 7.5% surcharge on total booking fees for stays under 28 nights — was introduced by the Short Stay Levy Act 2024. It applies to bookings on platforms like Airbnb and Stayz, as well as direct bookings handled by hosts.
The key policy goals were threefold:
But the early results have been mixed.
📉 Levy Revenue Isn’t Meeting Expectations
The government initially projected the levy would generate about $75 million annually, funding new social housing projects and maintenance. Yet in the first six months alone, only $19 million was raised, even though final figures may rise slightly as late payments are recorded.
At the same time, Homes Victoria reported a $359 million deficit, and vacancy rates continued to shrink through 2025, despite the tax’s introduction.
Opposition Leader Jess Wilson called the levy a “desperate attempt” to fix the agency’s finances, arguing:
“You cannot tax your way to more affordable homes.”
The state government maintains the levy doesn’t impact service delivery and is designed to encourage longer-term rentals, alongside broader planning reforms and housing supply initiatives.
📊 The Bigger Issue: Listings Still Aren’t Becoming Long-Term Rentals
Even with a levy intended to push property owners toward long-term lettings, early evidence suggests this hasn’t happened at scale. Several studies — including research led by Professor Naomi Dale of the University of Canberra — indicate that levies alone are unlikely to shift short-stay hosts into the long-term rental market.
According to the study:
“Many [short-term rental] owners were soon-to-be retirees or people who owned the homes with the intention of moving into them in future.”
“These owners were dissuaded from switching to long-term rentals due to laws that largely favour renter rights…”
Because these homes are often second residences or holiday houses, the short-stay market remains financially more attractive — or at least more flexible — than long-term leasing.
🧠 What This Means for Owners & Investors
If you’re a property owner considering whether to operate in the short-stay or long-term rental market, here are the key takeaways:
✅ Short-Stay Still Has Appeal
Despite the levy and market plateau, tourist destinations like the Mornington Peninsula, Portsea and coastal towns remain high-demand hubs for travellers, especially during peak seasons and for weekend getaways.
⚖️ Short-Stay vs Long-Term Rental Returns
For many property owners, short-stay accommodation — particularly when professionally managed — still outperforms traditional long-term leases on a per-night basis. Leisure travellers, business guests and relocators often value quality, serviced homes over standard leases.
📊 Regulations Are Shifting
Understanding compliance — including the levy obligation, registration requirements and potential local council rules — is more important than ever. Failure to comply can lead to penalties or removal from major booking platforms.
🤔 Levies Don’t Automatically Solve Housing Shortages
If your goal is to increase long-term rental supply, the levy on its own won’t be a silver bullet — especially if owners prefer to keep properties available for flexible use or future personal plans.
🛏️ What It Means for Guests
For travellers and longer-stay guests:
💡 The Corporate Keys Perspective
At Corporate Keys, we’re committed to helping property owners and guests navigate this changing landscape:
✔ We handle all levy reporting and compliance on your behalf
✔ We optimise pricing to ensure your property remains competitive
✔ We balance short-stay flexibility with long-term performance strategies
✔ We provide seamless stays — perfect for corporate travellers, relocations and extended holidays
These regulatory changes highlight how important professional management has become in protecting income and ensuring your property remains compliant, profitable and future-ready.
