Victoria’s Short-Stay Levy: A Year Later, Is the Tide Turning?
More than a year after its introduction, Victoria’s 7.5% short-stay levy is showing early signs of impacting the state’s rental market. While the government initially aimed to generate $75 million in its first year to fund social and affordable housing, the levy actually exceeded expectations, bringing in $85.8 million in 2025, according to the State Revenue Office.
Slowing Growth and Shifting Market Dynamics
Data from AirDNA reveals a significant slowdown in the growth of short-stay listings across Victoria following the levy’s implementation on January 1, 2025. Between January 2022 and January 2025, listings experienced steady year-on-year growth. In January 2023, there were approximately 37,097 listings, up from 31,410 the previous year. This growth continued in 2024, reaching 45,178 – a nearly 22% increase. However, the introduction of the levy in 2025 saw a dramatic shift, with growth slowing to just 2.6% (46,342 listings). By January 2026, listings had even declined by approximately 0.5% compared to the previous year.
Is the Levy Driving Sales?
Some real estate agents believe the levy is prompting property owners to sell their short-term rental investments. Trish Goodlet, director of Decent Life Real Estate in Apollo Bay, has observed an increase in homes previously used for short-stay accommodation being listed for sale. “We’ve definitely got a lot of listings that were profitable successful [short-stay] investments for people and then with the levies some have listed those for sale because they’re not performing as well as they hoped,” she said.
Did you understand? The Victorian Government has stated that every dollar raised from the short-stay levy will be directed towards providing social housing for Victorians in need.
Beyond the Levy: Other Contributing Factors
However, attributing the slowdown solely to the levy is complex. Experts suggest that rising interest rates and broader economic conditions are also playing a role. Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, noted that increased caution among investors, driven by the cost of living, is likely contributing to the trend. He also pointed out that the post-COVID boom in short-term rentals was likely unsustainable, and the current stabilization represents a return to more normal market conditions.
Industry Response and Concerns
The introduction of the levy was met with criticism from the short-stay accommodation sector. Airbnb previously stated that the 7.5% rate was “too high” and would unfairly benefit hotels. Concerns were also raised about the potential for decreased regional tourism if the levy was passed on to consumers.
Stayz has maintained that while the sector should contribute to government revenue, the levy should be reasonable, uniformly applied, and administered by the state. Eacham Curry, senior director of government and corporate affairs at Stayz, emphasized the importance of a fair and consistent approach.
The Impact on Guests: Costs Passed On
Investment property owner Benny Harrap, who operates short-stay rentals in Wodonga, reported that the levy has not significantly impacted his business. He explained that the cost is typically passed on to guests through booking platforms. “The way it works within the platforms is they charge on top of all the fees,” he said. “So I charge a fee, there might be a cleaning fee on the platform and then the platform charges a fee and they’ll put an additional 7.5 per cent on top of that, which gets charged to the customer.”
Looking Ahead: What Does the Future Hold?
The long-term effects of the short-stay levy remain to be seen. While the initial data suggests a slowdown in listing growth, the market is influenced by a multitude of factors. The Victorian government maintains the levy is “working as intended,” but has not yet detailed specific projects funded by the revenue generated. Continued monitoring of listing numbers, occupancy rates, and revenue data will be crucial to understanding the levy’s true impact on Victoria’s short-stay accommodation market and its contribution to social and affordable housing.
Frequently Asked Questions
- What is the short-stay levy in Victoria?
- It’s a 7.5% tax on the total booking fee for short-stay accommodation in Victoria, applied from January 1, 2025.
- Who pays the levy?
- The levy is collected by booking platforms (like Airbnb and Stayz) or directly from hosts.
- Where does the money from the levy go?
- The revenue is intended to fund social and affordable housing initiatives in Victoria, with 25% invested in regional areas.
- Does the levy apply to all properties?
- The levy generally applies to residential properties rented for less than 28 days, excluding owner-occupied homes and some commercial premises.
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