The Evolving Landscape of Short-Term Rentals: Opportunities and Challenges for Landlords

Thinking of investing in a short-term rental? There’s no shortage of ways for landlords to achieve success in Adelaide. However, it’s important to consider the upsides alongside the challenges, with each city offering its own concerns to reflect upon. This way, you’ll understand the full picture before delving into the market. To help you make an informed decision, we’ve highlighted two opportunities and two challenges to think over before you transform or invest in a property with the short-term rental market in mind.

Challenge: Risk of increased rates

It’s been impossible to avoid interest rate discussions over the last few years, with rising rates challenging existing and prospective homeowners. Of course, landlords focused on the short-term rental market must consider these costs, with some debating whether to invest or hold onto additional properties.

While many of Adelaide’s short-term rentals continue to generate significant revenue, weighing up this rental income alongside mortgage repayments is fundamental to success. Though interest rates could drop in 2025 and beyond, the current economic climate makes predicting the direction of interest rates a risky endeavour.

Opportunity: Growing tourism market

With tourists being one of the leading groups of short-term rental tenants, the good news for landlords in Adelaide is that the city is certainly becoming a thriving destination for travellers arriving from near and far.

For example, over 102,000 people attended the recent LIV Golf tournament, while other hugely popular annual events include the Adelaide Fringe and the Tour Down Under. This growing tourism market is certainly an upside for short-term rental owners.

Challenge: Housing price increases

If you’re hunting in the Adelaide property market for a bargain property to transform into a short-term rental, getting your hands on a low-cost home isn’t so easy. Adelaide is expected to experience notable growth in 2025, with the average median house value now over $1 million.

Naturally, investing in property is becoming an increasing challenge for aspiring short-term rental landlords, unless you’re already well-positioned in the market. You’ll have to carefully weigh the numbers before making a final decision.

Opportunity: Attractive revenue and occupancy rates

Although the cost to invest in property is growing in Adelaide, short-term rentals continue to generate substantial revenue. According to Airbtics, Adelaide-based Airbnb listings command an average daily rate of $221, outperforming cities like Brisbane and Perth.

At the same time, the average occupancy rate is 71%, putting Adelaide amongst the country’s top-performing destinations for Airbnb listings. Depending on your overall costs, figures like these could mean your short-term rental offers plenty of financial upside.

Speak to the experts

Ready to explore a short-term rental listing? Get in touch with the experts at Instyle Property Management. Our award-winning and family-owned specialist property management agency has a highly experienced team that can help manage your property to success.