Melbourne vs Sydney Airbnb: which city actually makes you money

Sydney leads on every headline metric, but Melbourne's lower entry cost and surging occupancy tell a more complicated story. Here's how to read the numbers before you commit.

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The single figure that settles most of these debates is median annual revenue, and here the gap is not subtle. Sydney listings are generating A$15.9K against Melbourne's A$10.6K — that's a A$5.3K annual difference sitting in someone else's pocket if you pick the wrong city. Before you put that down to Sydney being an obviously bigger, shinier market, it's worth tracing exactly where the gap comes from, because the answer shapes the whole investment case.

This piece works through the headline numbers, the seasonal shape of demand in each city, the regulatory picture, and what both markets look like for a buyer coming in now. The data comes from the latest Inside Airbnb snapshot. What it can't tell you is purchase price or mortgage cost — and in two cities where property values are some of the highest in the southern hemisphere, that caveat matters enormously.

Where the money actually is

Sydney's A$208 nightly rate is A$51 ahead of Melbourne's A$157. At 32% occupancy across a full year, that rate premium compounds into roughly 116 nights of bookings generating A$208 each. Melbourne's 30% occupancy on A$157 produces a materially weaker number, and no amount of squinting at the growth figures changes the gap. Both markets posted strong occupancy gains year-on-year — Sydney up 9.0 points, Melbourne up 8.6 — so the momentum story is roughly equivalent. Sydney just started from a better position and is pulling further ahead in absolute revenue terms.

The active listing count is the one metric that slightly favours Melbourne's future prospects. Sydney has 13,211 active listings against Melbourne's 15,424, which sounds like Melbourne is more crowded — and it is, by headcount. But Sydney's higher revenue despite fewer listings suggests demand is absorbing supply more efficiently there. Melbourne's larger supply base is almost certainly one reason its nightly rate sits A$51 lower. More competition, more pressure on price.

The entire-home share is virtually identical at 81% and 82% respectively, so that's not doing any analytical work here. Both markets are dominated by whole-property lets, which is the product type most investors are buying anyway.

The shape of the year

Both cities peak in July and trough in October — an identical seasonal structure, which is mildly surprising given how different the two cities feel on the ground. July is Australian winter, and both markets catch domestic travel and the international visitor surge that comes with school holidays. The peak-to-trough swing is 20 percentage points in Melbourne (67% down to 47%) and 20 points in Sydney (62% down to 42%). Symmetrical, and neither city looks dramatically more volatile than the other.

The practical difference is the absolute level. Melbourne's July peak of 67% is actually higher than Sydney's 62%, which tells you Melbourne has pockets of genuine demand concentration in winter — events, sport, conferencing. But Melbourne's trough of 47% still underperforms Sydney's trough of 42%... wait, it's the opposite: Melbourne troughs at 47%, Sydney at 42%, so Melbourne actually holds occupancy better in the slow months. A year-round operator would prefer Melbourne's floor. A seasonal operator who wants to maximise a summer letting window and leave the property vacant otherwise will still find Sydney's rate premium makes the maths work harder in their favour during those active months.

What the rules actually do to your plan

Neither city currently imposes a night cap, which is the single regulatory variable that has killed short-term rental economics in places like New South Wales's own earlier proposals and in parts of Scotland and Barcelona. The absence of a cap in both markets is the green light most buyers need at the headline level. It means you're not running a compliance countdown or structuring around a 180-night ceiling.

That said, New South Wales has a more active regulatory history around short-term letting than Victoria — it introduced a state-wide framework in 2021 that requires hosts to register and allows strata schemes to vote to exclude STR entirely in buildings where 75% of owners agree. That strata exclusion clause is the real catch for Sydney apartment buyers. If you're buying into a block, check the by-laws before you exchange. Melbourne operates under a lighter Victorian framework with no equivalent strata veto mechanism at this point. For a buyer choosing between a Sydney apartment and a Melbourne apartment, Melbourne carries less regulatory tail risk on the strata question specifically.

The call

Sydney is the better short-term rental market. The A$51 rate premium, higher absolute revenue, and more efficient supply absorption make that straightforward. If your underwriting requires A$15K-plus in annual STR revenue to service the debt, Melbourne simply doesn't get you there at the median. Sydney does, before you've even optimised pricing or picked a high-demand suburb.

The honest case for Melbourne is a purchase price argument this data can't make for you. If Sydney property costs you A$300K-400K more for a comparable asset — which is plausible in many inner-suburb comparisons — the A$5.3K annual revenue gap could take decades to recover. A buyer with a tighter acquisition budget who can get into a well-located Melbourne property at a meaningfully lower entry point might find the risk-adjusted return lands better, even on weaker top-line revenue. Melbourne also suits the investor who wants to minimise strata regulatory exposure, or who genuinely believes the city's occupancy momentum — up 8.6 points in a single year — has further to run. Those are real considerations. They just don't change the fact that, on the numbers in front of us, Sydney wins.

Frequently asked questions

Methodology. Figures are medians across active listings from Inside Airbnb's 2025-08-05 snapshot, refreshed automatically as new snapshots land. The table and chart above always show the latest data; the commentary is re-written when the numbers move materially.