Sydney Airbnb Nets 1.3%, Barely Beating Long-term Rent

Sydney's short-term rental premium looks attractive at first glance: gross revenue runs 46% ahead of long-term rent for a 3-bed house. After every real cost lands, the gap narrows to a fraction of that. This article walks through both a 3-bed house and a 2-bed apartment because the cost structures differ materially. Apartments add body corporate levies but enter the market at roughly half the price of a house, so the net yield verdict is not automatically the same for both property types.

Warning: short-term rental figures apply only where legally permitted. NSW Greater Sydney caps non-hosted short-term rentals at 180 nights per year, with mandatory NSW Planning Portal registration ($65 initial, $25 annual renewal) and fire safety compliance. Hosted rentals (owner-occupier present) are not subject to the 180-night cap. The modelled revenue below reflects the regulatory ceiling, not a full calendar year.

Sydney's 3-Bed House: 46% Gross Premium Collapses to Roughly 1.3% Net

A Sydney 3-bed house sells for around $3,404,126, a long way above the NSW median of $991,198 and the national median of $833,886. Weekly rent lands at $1,235 ($5,353/month), generating annual gross rent of $63,337. On the short-term rental side, a nightly rate of $634 applied across the 180-night regulatory cap, at 82% average occupancy, produces $93,977 in gross revenue. The side-by-side cost breakdown looks like this:

Note: this table assumes self-management for the short-term rental (the dashboard default) and an agent-managed long-term rental. Agent-managed is standard practice in Sydney for investment properties held by non-owner-occupiers.

Airbnb Fees and the 180-Night Cap Do the Heaviest Lifting

The biggest single deduction from short-term rental gross is the Airbnb host fee at 15.5%, which strips roughly $14,566 off the top. That alone is larger than every other short-term line item except maintenance. Other platforms charge differently: Stayz runs closer to 5% and Booking.com around 15%, so hosts who list across multiple channels blend a lower effective fee than Airbnb-only operators. Direct bookings carry no platform fee at all, though they require the host to handle marketing, payments, and support directly.

The second structural drag is the 180-night cap itself. A Sydney short-term rental can only legally achieve roughly 49% of a full calendar year even before occupancy is factored in. At 82% occupancy across those permitted nights, the ceiling on gross revenue is $114,032 at 100% occupancy and $93,977 at the market average. Maintenance on a furnished short-term rental also runs materially higher than a long-term rental because it includes furnishing replacement, linens, consumables, and turnover cleaning; that is why the short-term row shows $19,160 against the long-term row's $16,289. Utilities are another cost that shifts between strategies: short-term landlords pay utilities in full ($3,432/year), while long-term tenants typically pay their own power, gas, and internet.

Sydney's 2-Bed Apartment: Lower Entry Price, Body Corporate Changes the Maths

A 2-bed Sydney apartment sells for around $1,474,367, roughly 43% of the 3-bed house price. Monthly rent runs $4,687. A short-term rental at $381/night grosses revenue across the same 180-night cap and 82% occupancy assumptions. The dashboard shows the full apartment cost stack at suburb level, but the high-level pattern is: the apartment entry price ($1,474,367) is roughly 43% of the house price while body corporate levies of $7,866/year apply on top of the cost lines already listed above. Council rates, insurance, and utilities scale down roughly proportionally to the lower property value.

Body corporate levies appear in both columns because they are a property-level cost that applies regardless of rental strategy. For a Sydney 2-bed apartment, the figure of $7,866/year reflects typical levies covering building insurance, common-area maintenance, sinking fund contributions, and amenities such as lifts, pools, or gyms where present. Older walk-up blocks in Darlinghurst or Paddington carry lower strata than newer high-rise complexes in Potts Point or Waterloo, which is why strata should always be checked on the specific property before committing.

House vs Apartment: The Entry Price Beats the Strata Drag

The short-term rental comparison tends to favour apartments on percentage net yield even once body corporate is included, because strata of $7,866 is a fixed dollar amount that shrinks in percentage terms when spread across a smaller denominator of $1,474,367 rather than $3,404,126. Look at the suburb-level apartment figures in the dashboard for the exact net yield on a specific building.

Dollar income is a different story. The 3-bed house delivers $45,876 net annually on short-term rental; the apartment's absolute cashflow is lower because the smaller property throws off fewer gross dollars even at a higher percentage yield. Which is the right property type depends on what the investor optimises for: yield per dollar deployed (favours apartments), absolute cashflow (favours houses), or capital growth (historically favours Sydney freestanding houses, which tend to outperform apartments on long-run appreciation because of land value). Sydney is fundamentally an appreciation play in either format. Gross yields at 1.9% for long-term and 2.8% for short-term sit well below the national median of 4.0%, so the investment thesis rests on capital growth making up the difference over a hold period measured in years, not months.

Short-term Rental Break-Even Occupancy Is 56%

At 56% occupancy, a Sydney 3-bed house grosses the same from short-term as it would from a standard lease. This is the floor, not the target. The market median runs at 82%, comfortably above break-even, which is why the short-term route produces higher gross revenue in the first place. The figure matters for stress-testing: during the 2020-2021 travel disruption, Sydney short-term occupancy fell below 40% for extended periods, below break-even, meaning short-term operators would have been better off renewing a standard 12-month lease at the start of that cycle. The 180-night cap has already compressed the room to absorb a downside scenario, because the revenue ceiling is fixed regardless of demand.

View Sydney in the dashboard → Free preview · every bedroom count and property type

Hiring a Professional Manager Cuts Net Yield to 0.9%

The tables above assume the owner self-manages the short-term rental, which is the dashboard default. Self-management is realistic for investors who live in Sydney and have the time to handle guest messaging, key handovers, cleaning coordination, and small maintenance calls. For owners who cannot, hiring a professional short-term rental manager adds roughly $16,916 annually, or around 18% of gross revenue. That drops the 3-bed house net yield from 1.3% to 0.9%, bringing it effectively in line with the long-term rental result. Total short-term costs under full management land at around $65,017.

At that point, the short-term premium over a standard lease almost disappears, and the case for taking on the compliance workload (NSW Planning Portal registration, fire safety inspections, neighbour complaint risk, 180-night tracking) becomes harder to justify on yield alone. Many investors in Sydney who run the numbers on full-management short-term end up back with a standard 12-month lease through an agent at around 7% of gross rent, because the cashflow gap is small and the operational burden is dramatically lower.

Negative Gearing and Depreciation Can Flip the After-Tax Comparison

The pre-tax figures above tell only half the story for Australian investors. Negative gearing allows rental property losses to offset salary and wage income, reducing taxable income dollar-for-dollar. A Sydney investment property at $3,404,126 with an 80% mortgage at current rates often runs at a significant cash-flow loss in the early years because interest alone can easily exceed rental income of $63,337. That loss becomes a tax deduction. At the 45% top marginal rate (taxable income over $190,000), every $1 of loss saves 45 cents in tax. At the 30% bracket ($45,000 to $135,000), it saves 30 cents. So a $20,000 annual cash loss generates roughly $9,000 in tax savings for a high-income investor, leaving a net after-tax loss of $11,000 and materially changing the investment's real return.

Depreciation compounds this. The building depreciation allowance gives 2.5% of the building's construction cost each year for buildings less than 40 years old, a non-cash deduction that does not require any out-of-pocket spending. For a depreciable building value of around $2,723,301 (about 80% of sale price in Sydney), the annual allowance runs to roughly $68,083. Fixtures and fittings depreciation on air conditioning, carpets, appliances, and blinds add more in the first several years. A profitable short-term rental producing positive cashflow benefits from depreciation but not from negative gearing because there is no loss to offset. A long-term rental running at a modest cash-flow loss can actually deliver a better after-tax return than the numbers in this article's table suggest, particularly for high-income professional investors. The 50% capital gains tax discount for properties held longer than 12 months applies equally to both rental strategies on eventual sale.

The dashboard calculates your after-tax position including negative gearing, building depreciation, and your marginal tax rate based on the salary you enter. Running the same Sydney property through the dashboard at $80,000, $150,000, and $250,000 of personal income produces three very different after-tax verdicts, and is often the piece of analysis that changes an investor's decision between short-term and long-term rental strategies. These are city-level medians. Individual suburbs diverge significantly: Waterloo offers the highest gross yield in the sample at 3.7%, while Potts Point - Woolloomooloo sits at 1.0%, a variance of roughly 3.7x that no city-level article can capture. The dashboard shows suburb-level data for every bedroom count and property type.

For comparable analysis in other Australian cities, New South Wales Rental Investment Insights and Waterloo Leads Sydney Inner South at 3.7%, Nearly Quadrupling Potts Point cover the same real-cost breakdown question. Methodology on the calculations is documented in the market score methodology and data sources pages.

Data reflects market conditions as of April 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.