The Shift Away From Short-Term Rentals Among Australian Investors

As we move through 2026, one of the clearest behavioural shifts in Australian property investing is now firmly established. Short-term rentals, once promoted as a high yield alternative to traditional leasing, have fallen out of favour with the majority of investors.

What began as a gradual reassessment has become a decisive move. More than ninety percent of investors now avoid short-term rental strategies altogether, choosing long-term tenancy models instead. This change reflects a broader recalibration of risk, regulation, and investment priorities after several volatile years in the property market.

Understanding why this shift occurred matters. It provides insight into how investor behaviour is evolving and what sustainable property strategy looks like in the current environment.

Why Short-Term Rentals Lost Momentum

Short-term rentals rose in popularity during a period when low interest rates, strong tourism demand, and limited regulation made the model appear attractive. On paper, higher nightly rates suggested stronger yields. In practice, the strategy proved far more complex.

By the time we reached 2025, many investors had already experienced the downside. Income volatility, inconsistent occupancy, rising management costs, and regulatory uncertainty began to outweigh the perceived benefits.

From a 2026 perspective, this reassessment looks less like a trend and more like a structural shift.

Regulation Changed the Risk Equation

One of the most influential factors behind the move away from short-term rentals was regulation.

Across multiple states, local councils and governments introduced tighter controls on short-term accommodation. These included registration requirements, levy schemes, compliance costs, and proposed limits on the number of nights a property could be rented on a short-term basis.

For investors, the issue was not simply whether regulation existed. It was the uncertainty around how far restrictions might go and how quickly policy settings could change.

When regulation becomes unpredictable, risk increases. Investors seeking clarity and long-term planning certainty began to question whether short-term rental models aligned with their broader wealth goals.

This is particularly relevant when property forms part of a multi-year portfolio strategy rather than a standalone income play.

Management Complexity Became a Deterrent

Short-term rentals require significantly more involvement than long-term leasing.

Frequent guest turnover, cleaning coordination, maintenance scheduling, platform management, pricing adjustments, reviews, and compliance obligations all add layers of complexity. Even when outsourced to specialist managers, these services come at a cost that erodes net returns.

Many investors underestimated the time and mental load required. Others discovered that professional management reduced yields to a point where the financial upside no longer justified the effort.

By contrast, long-term rentals offered simplicity. Once a lease is in place, income becomes predictable, management is streamlined, and day to day involvement is minimal.

For time poor professionals, this distinction became decisive.

Yield Expectations Versus Yield Reality

Short-term rentals are often marketed on the basis of gross yield comparisons. Nightly rates can look impressive when multiplied across a full year.

However, experienced investors learned that gross yield is not the same as reliable income.

Seasonality plays a significant role in short-term rental performance. Properties may perform well during peak travel periods and then sit vacant for extended stretches. Marketing costs, platform fees, cleaning expenses, insurance premiums, and vacancy gaps reduce net returns.

Long-term rentals, while sometimes producing lower headline yields, offer consistency. Fixed leases allow investors to forecast cash flow accurately and plan borrowing, reinvestment, and portfolio growth with greater confidence.

Vacancy Risk Looked Different After Volatility

Vacancy risk is often overlooked during strong market conditions. It becomes highly visible during periods of uncertainty.

Short-term rentals are exposed to tourism cycles, economic shocks, and changes in consumer behaviour. When demand softens, vacancy risk increases immediately.

Long-term rentals operate under a different risk profile. Once a lease is signed, occupancy is largely secured for the term of that agreement. In an environment where rental demand remains strong across most capital cities, long-term vacancy risk is generally lower and more predictable.

For investors focused on portfolio resilience rather than opportunistic income, this distinction became increasingly important.

Investor Behaviour Shifted Toward Stability

The move away from short-term rentals reflects a broader change in investor mindset.

After several years of interest rate increases, market fragmentation, and regulatory intervention, investors became more selective. Rather than chasing the highest possible return, many began prioritising stability, risk management, and long-term capital growth.

This shift aligns closely with how professional investors approach property. They focus on asset quality, tenant demand, location fundamentals, and portfolio structure rather than short-term yield spikes.

Long-term rentals fit naturally into this framework.

What This Means for Portfolio Strategy in 2026

From a strategic perspective, the preference for long-term rentals has several implications.

First, asset selection matters more than ever. Properties must appeal to long-term tenants and owner occupiers alike. Layout, location, amenity access, and livability drive demand and reduce vacancy risk.

Second, borrowing and structuring decisions must align with long-term income stability. Predictable cash flow supports sustainable leverage and future acquisitions.

Third, ongoing review becomes essential. Rental markets, tenant demand, and regulatory settings continue to evolve. Portfolios that are actively reviewed and adjusted perform more consistently over time.

This is where many investors struggle when operating alone. Without a structured review process, decisions become reactive rather than strategic.

Why Long-Term Rentals Align With Responsible Investing

Another dimension of this shift is social and community impact.

Housing affordability and rental availability remain key national issues. Long-term rentals contribute to housing stability, particularly for families and professionals seeking security.

While policy debates continue around the role of short-term accommodation, investor behaviour has already moved in favour of long-term solutions. Many investors now prefer strategies that align with both financial objectives and broader social outcomes.

This alignment reinforces confidence and reduces exposure to future policy changes.

What Ramsey Helps Investors Do Differently

The shift away from short-term rentals highlights a deeper issue. Many investors adopted short-term strategies without a clear long-term plan. Decisions were often driven by headlines or yield comparisons rather than integrated portfolio thinking.

At Ramsey Property Wealth, the focus is different.

Investors are guided to understand how rental strategy fits within their overall wealth plan. This includes assessing risk, modelling cash flow, selecting assets with long-term demand, and reviewing performance regularly.

Rather than choosing between short-term or long-term rentals in isolation, investors are supported to make decisions that align with their personal goals, time capacity, and appetite for complexity.
.

Looking Ahead

As we move further into 2026, it is unlikely that short-term rentals will regain their former popularity among mainstream investors. The structural challenges remain, and investor priorities have shifted.

Long-term rentals now form the foundation of most serious property portfolios. They offer stability, predictability, and alignment with long-term wealth creation.

This does not mean short-term rentals have no place. In specific locations, with the right risk tolerance and operational support, they may still be viable. However, for most investors, particularly those building multi-property portfolios, long-term strategies provide a clearer and more sustainable path forward.

A Final Perspective

Property investment is not just about choosing the right asset. It is about choosing the right strategy.

The widespread move away from short-term rentals reflects a maturing investor base that values clarity, structure, and long-term outcomes over short-term optimisation.

If you want to understand how rental strategy, asset selection, and portfolio structure apply to your situation in 2026, a discovery call can help provide direction. The goal is not to rush decisions, but to build a clear framework that supports confident action over time.

Your Multi- Award Winning, Trusted Advisors

Ramsey Property Wealth is a multi-award winning property investment and mortgage advisory firm, recognised for our diversified service offering, allowing customers to shrink debt and build long term wealth through strategic mortgage strategy, property planning and acquisition.