Investors Prefer Permanent Tenants
Many Councils are trying to boost the availability of rental properties by restricting short-term letting, but a new survey shows only about 10% of investors offer their properties for the holiday market.
According to the Property Investment Professionals of Australia (PIPA), 92.1% of investors have no exposure to the short‑term rental market.
And it says only 1.7% of those who bought in the past 12 months intend to use the property for short-term letting.
PIPA’s survey shows the majority of investors don’t believe short-term letting provides stronger returns and more than 60% are concerned about greater risks of property damage and more day‑to‑day management required for holiday letting.
PIPA chair Cate Bakos says most investors focus on stability and long‑term asset performance.
“Adding the unpredictability of STRA properties into the mix simply doesn’t stack up for those who are serious about building wealth through property, with holiday home locations generally considered speculative rather than strategic by property investment professionals,” she says.
Brisbane City Council is the latest to crack down on short-term letting, announcing this week that permits will be required from July next year for those who want to continue operating.
Australia’s Hottest 100 Markets
Property experts have picked their hottest 100 property markets tipped to outperform in 2026.
Two-thirds of the annual realestate.com.au list is made up of capital city suburbs, and the rest are regional locations.
REA Group senior economist Eleanor Creagh says New South Wales has the highest number of entries in the top 100, with 25 locations included.
She says Western Sydney features heavily, particularly around the new airport and associated infrastructure corridor with new metro and rail connections.
Victoria has 22 entries, nine of which are in regional areas. Creagh says after years of sluggish growth, home prices in Melbourne returned to a record high in September.
Queensland has 17 entries, which Creagh says are focused on affordability and growth. She says many of the suburbs are in the outer fringe of Brisbane and will benefit from the 2032 Olympic Games.
Both Western Australia and South Australia have nine entries each, Tasmania has eight and both the Northern Territory and ACT have five each.
New Homes in Demand
While transaction levels took a dip in November, new home sales overall are significantly higher than at the start of the year and are gaining momentum.
The Housing Industry Association’s monthly survey of Australia’s largest volume builders shows that very strong sales in September and October have helped boost the annual results.
HIA chief economist, Tim Reardon, says it confirms that there is a recovery underway in new home building, with quarterly results the strongest since the middle of 2022.
“Sales in the three months to November 2025 were 9.4% higher than the previous quarter and 23.7% higher than the same quarter in the previous year,” he says.
“The broader economic environment is increasingly supportive of new home building in 2026.”
Reardon says confidence is being reinforced by strong population growth, low unemployment and rising established home prices.
“We are seeing enquiry levels rise and contract activity improve. Demand is not the challenge in this cycle. The challenge is delivering enough new homes to meet it.”
Aussie Holiday Homes Top the List
A global study ranks Australia as one of the world’s top destinations for holiday home investors.
It was just pipped to the post by Cyprus, which took out top spot for holiday home ownership.
The study by Compare the Market analysed 50 global destinations based on factors such as affordability, climate, and lifestyle amenities.
It says Australia outranked other popular European hotspots, including Malta and Italy, driven in part by its enviable climate and lifestyle.
But Compare the Market’s Stephen Zeller warns would-be investors that buying a holiday home is about more than just finding a beautiful location - it’s about making a smart financial decision.
He says owners who don’t offer homes for holiday rental frequently could lose tax deductions under new ATO rules targeting properties not available during peak seasons.
From July 1, it may treat some holiday homes as leisure facilities, meaning owners cannot claim deductions, unless it is mainly rented out to generate income.
The ATO is using artificial intelligence to identify holiday homeowners incorrectly claiming tax deductions, with properties not genuinely rented during peak periods.
Vacancies Ease, But Remain Tight
Australia’s vacancy rate rose slightly in November but remains very tight.
New data from SQM Research shows the national vacancy rate increased to 1.3% in November from 1.2% in October.
Vacancy rates in all capital cities are well below the 3% considered to represent a balanced market. Hobart is the lowest at 0.4%, followed by Perth, 0.7%, Adelaide, 0.8% and both Darwin and Brisbane, 1%.
Sydney’s vacancy rate is 1.4%, Canberra, 1.5% and Melbourne is the highest at 2%.
In November, national advertised rents remain fairly steady, although up 5.3% on the same time last year. Australia’s average weekly asking rent is now $668.41 per week.
SQM Managing Director, Louis Christopher, says the changes in vacancy rates reflect a normal seasonal pattern.
“Rental markets are still tight overall, but some cities – particularly Sydney – are showing tentative signs of easing,” he says.
He believes rental increases in 2026 will be more moderate.
“We think it is possible 2026 will be the first year since Covid where there is a balance of sorts between new supply and the expansion in underlying demand,” he says.
