Australia’s short-term rental market is thriving in 2025, presenting new opportunities for property investors across the country. While major cities continue to see growth, regional and coastal areas, where property prices are often more accessible, are delivering some of the highest returns.

If you’re considering an investment property and are curious about short-term letting, now might be the right time to take a closer look.

Why Short-Term Rentals Are Booming

With more Australians embracing flexible travel and working remotely, demand for short-term stays is surging in destinations that offer lifestyle appeal and weekend getaway potential. The return of domestic tourism and a shift in holiday habits have led to higher occupancy rates and stronger nightly returns across many locations.

PriceLabs reports a 25% year-on-year increase in active Airbnb listings, with over 166,000 now available nationwide. Average daily rates and occupancy continue to rise in both regional towns and outer-metro suburbs.

Where Short-Term Rentals Are Outperforming in 2025

One standout performer in 2025 is Noosa, Queensland. According to data from Airbtics:

• Noosa Heads properties average 288 booked nights per year

• Median occupancy sits at 79%, peaking at 94% over summer

• Average daily rate is $468, with typical hosts earning around $122,000 per year

These strong returns, combined with a relatively lower purchase price compared to major capital cities, make Noosa a compelling choice for investors seeking strong cash flow through short-term letting.

Other high-performing regions include:

• Cannonvale QLD (Whitsundays) – up to $141,000 in annual rental income

• Byron Bay NSW – still a favourite for holidaymakers, with strong occupancy year-round

• Launceston TAS – increasingly popular for weekend escapes

• Frankston and Werribee VIC – offering affordable entry points with short-stay potential

• Gosnells WA – low median house prices and growing traveller demand

These areas offer a balance of lower upfront investment and strong short-term rental yields, particularly in holiday-driven or lifestyle-focused markets.

What to Consider Before Investing

While the returns can be impressive, managing a short-term rental involves more than collecting the keys. Investors need to plan for:

• Property management and guest turnover

• Maintenance and furnishings

• Compliance with local council regulations

In areas like Noosa, for example, hosts are required to register and follow a code of conduct. However, regulation remains reasonable and has not dampened investor appetite in the region.

The Outlook for 2025

With interest rates trending downward, borrowing conditions are improving, making it more achievable for investors to enter high-performing short-term rental markets. The combination of lifestyle demand, flexible travel trends, and accessible purchase prices is creating a strong case for exploring options beyond the major cities.

Thinking About Investing?

If you’re considering purchasing an investment property to short-term let, now is a smart time to talk to your mortgage broker. They can walk you through the latest loan options, help you compare rates, and find a structure that works for your financial goals, especially in light of the recent rate drops.