Cessnock and Port Stephens among top areas for short-term rental growth in regional NSW

The popularity of the Hunter's wine region has led to an annual increase of 17.5 per cent in short-term accommodation in the Cessnock area which has a total of 751 rentals.

In Port Stephens, short-term rental numbers grew 6.1 per cent over the past year to 1,423.

Stronger returns for investors were a driving factor behind a rise in short-term rentals, according to REIA president Hayden Groves who said that the growing market of Airbnb-style properties was worsening the rental crisis across Australia.

It would take 113 days of hosting to make the same income compared to a long-term rental investment in regional NSW annually according to the analysis from REIA.

For a three-bedroom dwelling in regional NSW, it would take around 95 days of hosting to meet the annual return of a private rental.

"While short-stay accommodation has been an essential part of meeting high demand for domestic tourism accommodation, it is a driving factor behind the rental crisis," Mr Groves said.

Mr Groves said the report came at a time when vacancy rates across Australia remained at critical lows.

The rental vacancy rate as of August 2023 in the Lower Hunter (including Cessnock) is 1.3 per cent and 1.1 per cent in Port Stephens, according to CoreLogic.

According to the report, 109,726 (81.9 per cent) of short-stay listings were dwellings that can transition between the long-term rental market and the short-stay accommodation market.

Raine and Horne Nelson Bay and The Bay Holidays principal Debra O'Neill has 70 short-term holiday rentals on her books.

She said that although there had "possibly" been an increase in short-term rentals, a handful of investors were shifting to permanent rentals due to a slow in occupancy numbers in the region.

"We had three from our portfolio of 70 move over to permanent rentals and that's because of rising interest rates and needing the security of the regular income," Ms O'Neill said.

"We are finding that in the past six months, more people are spending their money on going overseas rather than staying locally."

According to Mr Groves, the rise of short-stay accommodation began in 2008 with the launch of Airbnb.

"Home-sharing platforms have substantially grown over the past decade," he said.

"For instance, Airbnb as the global market leader, managed to multiply the number of guests finding accommodation through its platform from 50 million in 2015 to 800 million in 2022.

"Of particular interest to real estate agencies may be that short-stay accommodation fees are significant - 15 to 25 per cent - when compared to much lower management service fees for long-term rentals."