Navigating the 2025 property market: Short-term vs. long-term rentals

Australia’s property market is evolving fast. Rising interest rates, stricter lending rules, and tighter rental supply are pushing investors to think beyond just buying the right property—now, how you rent it matters just as much.

If you’re sitting on the fence about whether to go the short-term or long-term route, you’re not alone. Each strategy has its place. We'll give you a clear, practical breakdown of both strategies: the financial upside, the risks, the effort involved, and how your location and goals shape what makes sense.

Let’s break down what’s really at stake in today’s rental landscape and figure out which approach will give you the strongest return in 2025.

What’s changed in2025?

These are the key shifts affecting rental performance at present:

• Post-pandemic tourism boom: With international travel fully recovered, Australia’s visitor numbers are surging. In 2024, over 11 million tourists visited the country—a number set to grow in 2025.
• Housing undersupply: Rental vacancy rates remain at record lows in most capital cities. While this is good news for both rental strategies, it gives short-term hosts the ability to charge premium rates during peak seasons.
• Tighter regulations: Governments across states are rolling out short-term rental frameworks—introducing caps, levies, and registration requirements. While some investors view this as a hurdle, smart operators see it as a maturing market that rewards professional, compliant hosts.

Short-term rentals: Higher effort, higher reward

Short-term rentals—think Airbnb and similar platforms—let you rent out your property by the night or week. They’re more hands-on, but with professional support, like MadeComfy, they can dramatically outperform long-term leases.

STR opportunities:

1. Stronger income potential

A well-managed short-term rental in a high-demand suburb can earn 30–60% more annually than a standard lease. Even with fluctuating occupancy, the nightly rate differential makes a big impact on cashflow.

Example: A two-bedroom apartment in Melbourne:

• Long-term: $600/week = $31,200/year
• Short-term: $250/night at 65% occupancy = ~$59,125/year before expenses Even after fees, short-term earns more.

2. Greater flexibility

Want to use your property occasionally for family or holidays?With short-term, you’re not locked into year-long leases. You control availability.

3. Dynamic pricing advantage

Unlike long-term leases, short-term rates adjust in real time to market demand. Events, school holidays, weekends—every high-demand window boosts your income.

4. Tax advantages

Short-term properties can access a broader range of deductible expenses, especially when managed as a business (speak to your accountant about this).

STR challenges:

1. Higher operating costs

Cleaning, utilities, linen, guest support—short-term rentals come with more moving parts. But these are offset when professionally managed for optimal occupancy.

2. More involvement (unless outsourced)

Guest turnover, maintenance, pricing updates—all require attention. That’s why many investors use companies like MadeComfy to manage everything end to end.

3. Regulatory compliance

Yes, there are more rules in 2025. But staying compliant isn’t difficult with the right systems in place. MadeComfy properties are registered, insured, and follow every local guideline.

Long-term rentals:Stability, but less upside

Leasing your property for 6–12 months or more is the traditional route. It’s simple and consistent—but in the current climate, it may not maximise your asset’s potential.

LTR opportunities:

1. Predictable income

Set monthly rent, low vacancy risk, and consistent tenants make this model low-volatility.

2. Lower operational complexity

Less guest turnover and no need for furnishings or ongoing servicing.

3. Easier financing perception

Banks often view long-term leases as more “stable,” which may help in some lending assessments.

LTR challenges:

1. Limited earnings ceiling

In today’s market, long-term yields are being outpaced by short-term options, especially in metro and coastal hotspots.

2. Inflexibility

Locked into fixed rent and lease terms, you can’t respond to seasonal demand or adjust your pricing.

3. Market lag

Rent increases can only occur at specific intervals and are often regulated—meaning you may miss out on capitalising on real-time growth.

Location, property type, and personal goals matter

Short-term isn’t for everyone. But if your property is located in or near a tourism hotspot, CBD, or business travel corridor—short-term might be the smarter move.

Ideal short-term rental locations:

• Coastal suburbs (e.g. Bondi, Gold Coast, Byron Bay)
• Inner-city apartments near transport
• Regional towns with local tourism pull
• Properties near hospitals, universities, or convention centr

And if you’re planning to sell in a few years? Running ashort-term rental in the meantime can boost your property's value by showinghigher income potential to buyers.

LTRs make more sense if:

• Your property is in a suburb with steady, year-round demand but limited tourism draw
• You value low-effort income and don’t want to outsource management
• You're holding long-term and want predictable cash flow

Maximise your rental returns with MadeComfy

In 2025, smart property investors aren’t just buying the right property. They’re running the right strategy.

Short-term rentals offer higher income, more flexibility, and better property care — especially in high-demand areas. Yes, they require more attention, but with MadeComfy, you don’t need to lift a finger.

We help property investors unlock the full potential of short-term rental without the hassle. From styling and photography to dynamic pricing, guest support, and cleaning—we handle it all.

Want to know what your place could earn as a short-term rental? Try the calculator or speak with