Strict regulations on short term rental accommodation may not help improve housing supply or affordability and can actually hurt tourism, according to new research by the University of South Australia.
Short term rentals, such as those offered on online platforms like Airbnb, have become a popular alternative to traditional hotels, providing travellers with more affordable, unique and localised experiences. However, short term rentals are often blamed for driving up rents and making residential housing harder to find, leading many governments to introduce strict regulations to limit them.
UniSA tourism researchers have found evidence to suggest that simply cracking down on short term rentals might not be the key to South Australia's housing crisis, and that the State Government should consider other solutions for the issue.
South Australia's short term rental sector is currently under review. In March 2025, the SA Parliament established a select committee to investigate the short-term rental sector's impact on housing affordability, community dynamics and potential regulatory measures. The committee's findings are imminent.
"Our analysis shows that recent efforts to impose strict regulations or outright bans on short term rentals, including in one of the world's most must-visit destinations - New York City - fail to have any meaningful impact on the housing market," says lead researcher Professor Peter O'Connor.
"Data suggests that restrictions neither significantly increase the supply of long-term housing, nor reduce rental prices. Instead, in NYC specifically, (long term) rental prices have increased at a faster rate than comparable cities, and residential vacancy rates remain largely unchanged.
"NYC hotels have benefited from the ban, experienced high growth in occupancy and room rates compared to before regulations were introduced. Not only has this turned New York into a hyper expensive destination for travellers, but the knock-on multiplier effect to the local economy has plummeted due to both lower visitor numbers and more concentrated visitor spending. Hotels win out, at the expense of tourists and locals.
"Learning from this lesson, Australia should seriously consider alternative ways to address the housing crisis, rather than obsessively focusing on short term rentals."
Short term rentals are defined as furnished apartments or houses rented for periods of less than a month, typically through online platforms such as Airbnb or Stayz. Owners might live on site at the same time as the renter, or they might live elsewhere. This alternative form of accommodation has emerged in recent years as an alternative, more authentic form of accommodation to traditional hotels, allowing travellers to 'live like a local', typically in a neighbourhood less frequented by tourists.
Co-author of the UniSA research, Dr Jessica Mei Pung, points out that short term rentals contribute to local economies through rental income and visitor spending. Beside benefiting from cultural exchanges with travelling guests, hosts earn additional income from the rental fees. Visitor spending also positively impacts restaurants, retail and attractions - all of which contribute to the destination and the wider economy.
"Regulating short term rentals allows governments to appear proactive on addressing the housing issue but the relative effectiveness of such restrictions is generally not considered. If the aim is to increase the availability and affordability of residential property, the evidence clearly shows that restrictions and bans have limited, if any, demonstratable effect".
Limitations for short term rentals are currently in place in parts of Australia including in NSW with a 180-day stay limit per year where the host isn't present. Councils can implement lower limits, as has Byron Bay which has a 60-day cap. Western Australia, on the other hand, is offering a $10,000 financial incentive to owners of short term rentals to return them to the long-term rental market.
Rather than introducing limitations, Prof O'Connor and Dr Pung say this approach may be more advisable if policymakers really want to address the housing issue, with a recent survey by Airbnb claiming that many hosts would rather let properties lie idle rather than rent them long-term.
