Short-term rental rules at some of Australia’s most popular tourist beaches could face a dramatic overhaul in a push to return hundreds of holiday homes to Sydney’s housing market.
Waverley Council is considering a plan to halve the number of days non-hosted short-term holiday rentals can be leased each year, reducing the current limit from 180 days to 90 days across the 2026 postcode, spanning Bondi, Bondi Beach, North Bondi and Tamarama.
The proposal, due to be debated by councillors next week, also calls on the NSW government to introduce a mandatory levy of 5 to 7.5 per cent on short-term accommodation bookings, with the revenue directed towards long-term housing programs.
If adopted, the changes would place Bondi at the centre of an increasingly contentious debate over whether housing in major tourism destinations should primarily serve visitors or permanent residents.
The council’s case rests on data showing that Bondi, which attracted 2.64 million visitors in 2024, has one of the highest concentrations of short-term rentals in Sydney, with 8.6 per cent of occupied private dwellings listed on holiday rental platforms.
The council says that the impact is magnified because apartments and units account for more than 86 per cent of local housing stock, meaning many properties traditionally available to renters are now competing in the lucrative visitor accommodation market.
According to council figures, there are about 923 active short-term rental listings across postcode 2026 – compared with 1256 rooms across the traditional accommodation sector.
At the same time, rental pressures continue to intensify, with median rents for a two-bedroom Bondi unit topping $1295 a week – almost 40 per cent higher than the Greater Sydney average of $800.
Nicole Gurran, associate professor in urban and regional planning at the University of Sydney, said the council faced the difficult task of balancing the needs of a globally recognised tourism destination with the housing needs of residents.
“In places like Waverley, there is almost unquenchable demand from visitors for residential accommodation alongside an equally pressing need for permanent rental housing,” she said.
“What we’re seeing across Sydney is the existing 180-day limit had failed to alter the underlying financial incentives favouring short-term accommodation.
“To disincentivise investment in short-term rental accommodation, you need a stronger cap.”
But short-term rental operators have pushed back against the proposal, arguing that they are being made scapegoats for a housing crisis driven by broader supply shortages.
Anna Mildon, who represents local operators through Guest Realty, said many hosts were ordinary home owners rather than commercial investors.
“These are not faceless investors hoarding dozens of apartments,” she said.
“They are everyday people. Many rent their homes only when they’re away. Otherwise, those homes would simply sit empty.
“We are not the villains.”
Mildon warned that tighter restrictions could also have an impact on cleaners, contractors and local businesses that depend on the visitor economy, saying Bondi’s popularity had been promoted by government and council tourism campaigns.
The debate mirrors battles unfolding across global tourism hotspots such as New York, Barcelona and Amsterdam, where governments have imposed tighter controls on short-term rentals amid growing concerns over housing affordability.
Closer to home, the City of Sydney is examining the impact of short-term rentals and has signalled a potential 60-day cap in some areas.
Any reduction to the existing cap would require approval from the NSW government.
Planning Minister Paul Scully said the government would consider the council’s proposal, but also noted that the state was facing a shortage of visitor accommodation, with 40,400 additional hotel rooms needed by 2035.
Susan Wheeldon, Airbnb’s country manager for Australia, described the council’s proposed measures as a “blunt” response that risked removing “an economic lifeline for many residents who rely on the income to stay in their own homes”.
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David Barwell is an urban affairs reporter for The Sydney Morning HeraldConnect via email.