Strict regulations on short term rental accommodation are unlikely to improve housing supply or affordability and could damage tourism, new research from the University of South Australia has found.
Short term rentals, booked via platforms like Airbnb and Stayz, have become a common alternative to hotels, offering travellers what many see as more affordable and authentic stays in local neighbourhoods. But they are often blamed for rising rents and a lack of available residential housing, prompting governments to impose restrictions.
UniSA tourism researchers say the evidence shows these measures are not delivering the desired results. South Australia’s short term rental sector is currently under review, with a parliamentary committee due to report on its impact on housing affordability, community dynamics and possible regulation.
Lead researcher Professor Peter O’Connor said global examples showed little to no benefit in imposing bans or strict caps. “Our analysis shows that recent efforts to impose strict regulations or outright bans on short term rentals, including in one of the world’s most must-visit destinations—New York City—fail to have any meaningful impact on the housing market,” he said.
“Data suggests that restrictions neither significantly increase the supply of long-term housing, nor reduce rental prices. Instead, in NYC specifically, (long term) rental prices have increased at a faster rate than comparable cities, and residential vacancy rates remain largely unchanged.
“NYC hotels have benefited from the ban, experienced high growth in occupancy and room rates compared to before regulations were introduced. This has turned New York into a hyper expensive destination for travellers, and the knock-on multiplier effect to the local economy has plummeted due to both lower visitor numbers and more concentrated visitor spending. Hotels win out, at the expense of tourists and locals.
“Learning from this lesson, Australia should seriously consider alternative ways to address the housing crisis, rather than obsessively focusing on short term rentals.”
Co-author Dr Jessica Mei Pung said short term rentals also contributed to the economy through rental income and visitor spending. “Regulating short term rentals allows governments to appear proactive on addressing the housing issue but the relative effectiveness of such restrictions is generally not considered,” she said.
“If the aim is to increase the availability and affordability of residential property, the evidence clearly shows that restrictions and bans have limited, if any, demonstratable effect.”
She said spending by guests supported restaurants, retail and attractions, while hosts benefited from cultural exchanges and additional income.
Limits on short term rentals already exist in parts of Australia, including a 180-day cap in NSW when the host is not present, with some councils such as Byron Bay imposing a 60-day cap. In contrast, Western Australia is offering a $10,000 incentive for owners to return their properties to the long-term market.
Prof O’Connor and Dr Pung suggest financial incentives may be more effective than restrictions, noting Airbnb’s own research found many hosts would rather leave properties empty than rent them long-term.
The research comes as the University of South Australia and the University of Adelaide prepare to merge to form Adelaide University in January 2026, aiming to deliver large-scale, industry-informed research and teaching.
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