🎯 STRisker: Bulletin - Sydney, Australia

Why Sydney’s STR Crackdown May Be Solving the Wrong Problem

Sydney is wrestling with a deepening housing crisis—rising rents, shrinking vacancy rates, and pressure on long-term residents who feel the market tightening around them. With these concerns mounting, the City of Sydney Council has turned its attention to short-term rental accommodation (STRA), voting to investigate a 60-night annual cap. But according to critics, including the voices highlighted in this recent discussion, the city may be aiming at the wrong target.

The argument begins with one core point: evidence shows caps don’t work. Supporters of the STR sector point to Byron Bay, where a 60-night annual cap was heralded as a way to return properties to the long-term rental market. But instead of easing pressure, Byron’s rents jumped 13.6% to $1,250 a week, and its vacancy rate plummeted to 1%. Properties didn’t flood back into long-term housing; instead, the market tightened even more—a trend critics say disproves the cap-as-solution narrative.

New York City is another cautionary tale. After rolling out policies that effectively banned most short-term rentals, hotel prices climbed 12.6%—three times the national average—and rents continued their upward climb anyway. Restricting STRs, the argument goes, didn’t fix the housing crunch; it only reshuffled where visitors stayed and pushed prices higher in other areas.

Even Sydney’s own research points in this direction. In a study last year, STRs were found not to be a major driver of local housing pressures. Instead, the city’s analysis shows that STRA tends to complement hotels, especially in tourist corridors where accommodation demand surges during big events. The true issue, critics argue, is Sydney’s chronic under-supply of housing—a problem caps simply can’t fix.

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Unlike cities scrambling to regulate STRs, NSW already has a detailed system in place: mandatory registration for every STRA property, a strong code of conduct, a two-strike rule that can ban rule-breakers for five years, and a statewide data-sharing system that gives regulators a clear picture of how often homes are rented. Councils can access this data, and both state and local governments share enforcement duties. Critics say this proves the tools exist—the challenge is using them consistently and effectively.

Instead of adopting caps that don’t solve the core problem, industry advocates argue for strengthening the existing framework: clearer enforcement pathways, better coordination between the state and councils, and improvements to compliance systems that already work. They also stress the role STRs play in Sydney’s economy. According to new figures, Airbnb contributed $6.6 billion to NSW GDP in 2024 and supported over 32,000 jobs, while also helping hosts cover rising mortgage and living costs.

The housing crisis is real—and Sydney’s residents feel it every day. But if the city is serious about solutions, critics argue the path is clear: build more homes, speed up approvals, and improve enforcement, rather than relying on policies that have failed elsewhere. The message is simple: caps won’t solve the crisis, but smarter regulation and more housing supply just might.

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