Victoria’s short-stay accommodation market has come to a standstill, casting doubt on the anticipated revenue for social housing from the state’s new Airbnb levy. Data from AirDNA reveals that the growth of listings on platforms like Airbnb and Stayz stagnated in 2025, coinciding with the introduction of a 7.5 percent levy on short-term rentals. This tax, implemented to support the construction of social housing, was expected to generate around $75 million annually for Homes Victoria.
With an average of 43,735 short-stay properties listed daily in 2025, the figures show barely a change from 43,738 in 2024. The surge in listings that began as the market recovered from the COVID-19 pandemic has halted, following a significant increase of 22 percent in 2023 and 12 percent in 2024. Analysts suggest that while the new tax could deter some hosts, the primary factor for the slowdown is a cooling market that has reached its demand ceiling.
Market Dynamics and Tax Implications
Linda Rollins, a research analyst at AirDNA, stated, “Some of the listing slowdown we’ve seen in the last few years could be attributed to hosts being deterred by higher tax levies, but it’s more likely the result of slowing demand.” The demand for accommodation dropped to 6 percent growth in 2024 and just 2 percent in 2025. This imbalance has led to a situation where supply outweighs demand, causing occupancy rates to decline and dissuading new listings from entering the market.
The 7.5 percent levy, announced in 2023 by the previous Andrews government, aims to encourage property owners to transition their short-term rentals to the long-term market. The revenue generated from this tax is designated for Homes Victoria to fund social and affordable housing projects, with 25 percent allocated for regional Victoria.
Despite the government’s projections, which anticipated raising approximately $75 million annually, the initial revenue has fallen short. In the first six months of the levy, only $19 million was collected, although this figure may increase as property owners finalize their payments for the 2024-25 financial year.
Challenges in Housing Affordability
The challenges for Homes Victoria are exacerbated by its recent $359 million deficit, leading to concerns about its ability to provide housing support. Even if the levy reaches its projected revenue, it will not significantly alleviate the financial strain on the agency, which has recorded deficits every year since its inception in 2021.
Research from the University of Canberra, led by Professor Naomi Dale, indicates that the new tax is unlikely to encourage a substantial shift of properties from short-term to long-term rentals. The study analyzed the relationship between short-term rentals and housing affordability across 18 local government areas and concluded that many short-stay owners prefer to retain their properties for personal use or future occupation.
“Many [short-term rental] owners were soon-to-be retirees or other individuals who intended to move into their homes,” Dale explained. “These owners were deterred from switching to long-term rentals due to regulations that primarily protect renter rights.”
State government data further illustrates the decline in available long-term rental properties, as the number of active rental bonds in Victoria dropped in 2025.
Opposition Leader Jess Wilson criticized the levy as a “desperate attempt” to rectify the failing finances of Homes Victoria. “Under Labor, Homes Victoria is sinking deeper into the red as a growing number of Victorians are awaiting housing support,” she stated. “You cannot tax your way to more affordable homes. A Liberal and Nationals government I lead will repeal Labor’s short-stay accommodation tax to ease cost-of-living pressures and drive investment back into Victoria.”
In response, a state government spokesperson asserted that Homes Victoria’s deficit does not affect service delivery and is “driven by timing differences between government funding and project expenditure.” The spokesperson emphasized that the Short Stay Levy is designed to encourage property owners to offer their dwellings for longer-term rent or sale, thereby providing more opportunities for Victorian families seeking homes.
The spokesperson added, “The only way out of the housing crisis is to increase supply – that’s why we’re streamlining the planning process and building more homes close to jobs, transport, and services.”
As Victoria navigates this complex situation, the future of its housing market and the effectiveness of the new tax remain uncertain.
