Why Airbnb in Melbourne is a Great Investment

Why Airbnb in Melbourne is a Great Investment

Explore The best locations for Airbnb in Australia.

Airbnb has become a popular platform for travelers looking for affordable and unique accommodations. Melbourne, Australia’s cultural capital, is a prime location for property investors considering Airbnb as a viable investment option. In this article, we’ll explore the reasons why investing in Airbnb in Melbourne can be a lucrative opportunity for both seasoned and novice investors.

The Airbnb Market in Melbourne

Growth and Potential

Over the past decade, Melbourne has seen significant growth in its Airbnb market. In 2020, it was estimated that there were over 24,000 active Airbnb listings in the city, showcasing an increase of approximately 50% since 2017. The city’s diverse attractions, thriving arts scene, and international events have contributed to a steady increase in demand for short-term rentals. According to Inside Airbnb, Melbourne’s Airbnb market has experienced a year-over-year growth rate of around 14%. The potential for earning a substantial rental income from Airbnb is high, especially given the city’s rising tourism numbers, which reached 10.4 million domestic and international overnight visitors in 2019. As Melbourne continues to attract visitors from around the globe, the growth and potential of its Airbnb market remain promising for property investors.

Demand for Short-Term Rentals

The demand for short-term rentals in Melbourne remains strong, with both domestic and international travelers seeking unique and affordable accommodation options. In 2019, According to recent data from AirDNA, 84% of active rentals in Melbourne are for entire homes, showcasing a clear preference for short-term rental accommodations like Airbnb. The city attracts millions of visitors annually, providing a steady stream of potential guests for Airbnb hosts and solidifying the demand for short-term rentals in the Melbourne market.

Advantages of Investing in Airbnb in Melbourne

Why Airbnb in Melbourne is a Great Investment - Advantages of Investing in Airbnb in Melbourne

High Occupancy Rates

Melbourne boasts impressive occupancy rates for Airbnb properties, with an average occupancy rate of 68% throughout the year. This is due in part to the city’s diverse range of attractions, which draw visitors year-round. The highest occupancy rates are typically observed in January, reaching up to 78% due to the influx of tourists during the summer season and popular events such as the Australian Open. High occupancy rates can translate into consistent income for property investors, making Melbourne an attractive location for Airbnb investments.

Attractive Rental Income

Airbnb hosts in Melbourne can potentially generate higher rental income compared to traditional long-term rentals. On average, Airbnb hosts in Melbourne earn a monthly revenue of $2,551. During peak seasons, such as January, this figure can rise significantly, reaching as high as $3,347 due to the increased demand for short-term accommodations. The flexibility to set nightly rates allows hosts to capitalize on peak seasons and high-demand events, boosting their overall revenue and making Airbnb investments in Melbourne an attractive opportunity.

Flexible Rental Options

Investing in an Airbnb property in Melbourne provides flexibility in how you manage your investment. You can choose to rent out your property for short-term stays, long-term stays, or a combination of both. This flexibility allows you to adapt your rental strategy based on market conditions and personal preferences.

Growing Tourism Industry

Melbourne’s tourism industry continues to grow, with the city hosting major events such as the Australian Open, Formula 1 Grand Prix, and Melbourne International Comedy Festival. In recent years, the city has seen a steady increase in tourism numbers. From 2017 to 2019, international visitors to Melbourne increased by 5.6%, while domestic overnight visitors grew by 8.7%. As tourism numbers increase, so too does the demand for short-term rental accommodations like Airbnb, providing ample opportunities for property investors to capitalize on this thriving market.

Choosing the Right Property for Airbnb Investment

Why Airbnb in Melbourne is a Great Investment - Melbourne's Central Business District

Location, Location, Location

When investing in an Airbnb property, location is key, as it can significantly impact the property’s occupancy rate, rental income, and overall appeal to potential guests. According to data from AirDNA, properties in popular tourist areas such as Melbourne’s Central Business District (CBD) and Southbank boast higher occupancy rates, averaging around 75% and 70% respectively, compared to other parts of the city. Moreover, rental properties in these prime locations can command higher nightly rates, with average prices of $150 in the CBD and $130 in Southbank. Researching the local market and identifying high-demand areas can help you make an informed decision when choosing the right location for your Airbnb investment, ensuring maximum return and guest satisfaction.

Melbourne’s Best Neighborhoods for Airbnb: Guide for Hosts

Property Type and Size

The type and size of the property you invest in can also impact your success as an Airbnb host. Consider the preferences of your target audience when selecting a property. For example, families may prefer larger properties with multiple bedrooms, while business travelers may opt for smaller, centrally located apartments.

Amenities and Features

The amenities and features of your property can greatly influence its appeal to potential guests. Properties with modern amenities, such as Wi-Fi, air conditioning, and a fully equipped kitchen, are likely to attract more bookings. Additionally, unique or standout features, such as a rooftop terrace or stylish interior design, can help set your property apart from the competition.

Regulations and Requirements for Airbnb in Melbourne

Why Airbnb in Melbourne is a Great Investment -- Regulations

Before investing in an Airbnb property in Melbourne, it’s important to familiarize yourself with local regulations and requirements. These can include:

  • Planning Permits: Depending on the location and property type, you may need to obtain a planning permit from your local council. In some residential areas, short-term rentals are subject to specific zoning regulations or may require a change of use permit.
  • Building and Safety Standards: Ensure that your property complies with the Building Code of Australia and relevant safety standards, such as providing functional smoke alarms, emergency exits, and safety equipment (e.g., fire extinguishers).
  • Registration: Some local councils in Melbourne require short-term rental hosts to register their property with the council. Ensure that you check with your local council to determine whether registration is required in your area.
  • Insurance: Obtain appropriate insurance coverage for your property, including public liability insurance and property insurance, to protect yourself and your guests in case of accidents or damage.
  • Taxes and Income Reporting: As an Airbnb host, you are responsible for declaring your rental income and paying any applicable taxes. Ensure that you keep accurate records of your earnings and expenses and consult a tax professional for advice on your tax obligations.
  • Guest Limits and Minimum Stays: Some local councils may impose restrictions on the number of guests allowed per property or require a minimum stay period for short-term rentals. Make sure to verify any such restrictions with your local council.
  • Noise and Nuisance Regulations: As an Airbnb host, you must ensure that your guests adhere to local noise and nuisance regulations. Establish house rules and communicate them clearly to your guests to minimize potential issues with neighbors and local authorities.

Check out more by reading Airbnb Regulations in Melbourne

By ensuring compliance with local laws and regulations, you can avoid potential fines or legal issues and operate your Airbnb business in Melbourne with peace of mind.

Useful link: Business licensing in Melbourne – Airbnb Help Center.

Maximizing ROI on Your Airbnb Investment

Why Airbnb in Melbourne is a Great Investment - ROI

Professional Property Management

Enlisting the help of a professional property management company can be a smart move for maximizing the return on your Airbnb investment. Property managers can handle tasks such as guest communication, cleaning, and maintenance, allowing you to focus on other aspects of your investment.

Effective Marketing Strategies

To attract guests and secure bookings, it’s essential to implement effective marketing strategies for your Airbnb property. This can include creating an appealing listing with high-quality photos and engaging descriptions, as well as promoting your property on social media and other online platforms. 

Explore Airbnb Marketing Strategy For Your Business.

Providing a Unique Guest Experience

Insuring that your guests have a memorable and positive experience is crucial for the success of your Airbnb investment. By providing exceptional customer service, responding promptly to guest inquiries, and offering personalized touches, you can encourage positive reviews and repeat bookings.


Investing in Airbnb in Melbourne offers numerous advantages, including high occupancy rates, attractive rental income, and flexibility in rental options. By carefully selecting the right property, adhering to local regulations, and implementing effective management strategies, you can maximize the return on your investment and enjoy the benefits of the thriving Airbnb market in this vibrant city.

Familiarize yourself with the following articles:

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