Why short-term rental property owners are making a motza in the regions

Short-term rental investors are reaping the rewards of limited supply in regional areas, generating larger gains than their urban counterparts.

Byron Bay is one of the top-performing regions for short-term rentals, generating larger gains than its urban counterparts.

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Short-term rental owners in regional areas are reaping the rewards of tight supply and business travel, with new data revealing investors in the holiday market are generating larger gains than their urban counterparts.

North Queensland’s Whitsundays topped international holiday letting analyst AirDNA’s list of top-performing regions for short-term rentals, with owners there generating annual revenue potential of $141,372, pushed by an average daily rate of $602.

Beachside hotspots of Byron Bay and Kiama made the list, with investors possibly capturing over $90,000 a year in revenue, while those on the Gold Coast and Tweed could make around $87,000 in annual revenue.

The top three best-performing areas was rounded out by Singleton, west of Newcastle, in second place with a $115,783 potential, while Western Australia’s Exmouth is in third place at $101,976.

North Queensland’s Whitsundays topped the list of top-performing regions for short-term rentals.

Founder and research director of buyers agency Propertyology, Simon Pressley, said holiday-makers were increasingly looking for more luxurious stays and would pay for the limited opportunities.

“If it wasn’t for Airbnb, the only place to stay was your old grubby three-star motel and … a lot of people would be like ‘yeah no thanks, that doesn’t really wet my appetite’,” Mr Pressley said.

He argued that the Covid pandemic increased the demand in the “already profitable” short-stay sector. “We wanted to escape our own homes because all of us were just sick of being there but we couldn’t go overseas even if you had the money to do so,” Mr Pressley said. “So more people explored different corners of regional Australia during the two most intense years of Covid.

“But it’s not a new thing. It’s just Covid accelerated what was already happening. In some cases it’s opened people’s eyes up to things that were already there.”

Propertyology head of market research Simon Pressley.

The lack of choice in the regions compared to capital cities helped keep the market buoyant, said holiday home management company Hometime’s head of sales, Shaun Craike.

“If you look at your big cities like Melbourne and Sydney, there are a lot of hotels that we’re directly competing with,” he said.

“Once you go to the regional market, there’s normally a lot less accommodation options.” he said this trend was benefiting short-stay investors in Western Australia’s Margaret River, where demand for holiday rentals in the popular wine region had remained strong since the pandemic.

“We saw (Margaret River) absolutely explode on the back of Covid, and people rediscovering these amazing local destinations,” Mr Craike said.

“That hasn’t gone away as we reopened to the world. People are still coming and doing yearly trips to certain regions as there is so much on offer locally.”

Tweed Heads is another regional spot breaking into the top-performing areas for short-term rentals.

It is not only those wanting to get away who are booking these escapes, said Ray White chief economist Nerida Conisbee, who believes a revival in work-related travel has boosted demand in some hotspots.

In Singleton, almost a quarter of the local workforce is employed in coalmining industry.

“I think what’s happening in some of these areas is that we tend to think of Airbnb as being (a place where) people are using just for holidays,” Ms Conisbee said.

“But people will use it if they have to go somewhere to work.

“A mining town might have quite a lot of Airbnbs because people may only be there for three months and then go again.”

AirDNA’s data did not include any market that had under 100 short-stay listings.