The Letto Property Group Q2 2026 STR Performance Index

# The Letto Property Group Q2 2026 Short-Term Rental Performance Index

A Quarterly Analysis of Market Dynamics Across Australia's Eastern Seaboard

The second quarter of 2026 has delivered a market environment defined by divergence. While the broader residential property market has decelerated to its slowest pace of growth since January 2025, the short-term rental sector across Sydney, Brisbane, and the Gold Coast has demonstrated a structural resilience that underscores the fundamental strength of professionally managed accommodation assets. The Cotality Home Value Index recorded just 0.3% national growth in April, dragged lower by Sydney and Melbourne, yet the STR markets in which Letto Property Group operates continue to deliver compelling returns for investors who understand the nuance beneath the headline figures.

This second edition of the Letto Property Group STR Performance Index provides a data-driven assessment of the quarter's key metrics, regulatory developments, and forward-looking indicators across our three core markets.

The Macro Context: A Market in Transition

The Australian property market has entered a period of recalibration. Cotality's research director Tim Lawless has noted that "the housing market was losing momentum from late last year as affordability and serviceability constraints weighed on demand," compounded by "the additional downside pressure of higher interest rates, sentiment has fallen off a cliff, and rising inflation is set to drive the cost of debt even higher" [1].

Capital city home sales over the past three months are 5.4% lower than a year ago and 7.6% below the previous five-year average. Auction clearance rates have held below 55% since the last week of March [1]. This softening of buyer demand, however, has not translated into weakness in the short-term rental sector. On the contrary, the tightening of the long-term rental market, with the national vacancy rate at just 1.6% and Brisbane recording a remarkable 0.8%, is channelling displaced demand directly into short-term accommodation [2] [3].

For STR investors, this macro environment presents a paradox that is, in fact, an opportunity: asset values are stabilising (reducing entry costs for new investors), while operational yields remain robust and, in several markets, are accelerating.

Sydney: Regulatory Headwinds, Operational Tailwinds

Sydney's residential market recorded a 0.6% decline in values over April, with prices now sitting 1.0% below their November peak and 1.9% below the November 2025 cyclical high [1]. Yet the city's short-term rental market tells a markedly different story.

The latest performance data reveals Sydney's professionally managed STR portfolio delivering an average daily rate between $239 and $341, with occupancy rates ranging from 58.2% to 78.5% and annual revenue potential between $50,800 and $97,700 [4]. For Letto Property Group's managed portfolio, which operates at the premium end of this spectrum, our proprietary data indicates median annual revenue of $82,000 per listing, with top-quartile properties exceeding $105,000, an uplift driven by our dynamic pricing engine, direct booking channel, and guest experience standards.

The quarter's most significant development has been the City of Sydney's formal investigation into restricting short-term rentals for investment properties, with a Greens-led proposal suggesting a ban when vacancy rates fall below 3% [5]. Inner-city suburbs such as Millers Point now report vacancy rates as low as 1%, with STR guests outnumbering permanent residents on some streets [6].

Letto Property Group's assessment is that regulatory tightening, while creating short-term uncertainty, will ultimately benefit professionally managed, compliant operators. Any reduction in amateur or non-compliant supply will concentrate demand among licensed agencies operating within the regulatory framework, a structural advantage for our clients.

Brisbane: The Quiet Powerhouse

Brisbane has consolidated its position as the most compelling growth story in Australian property. ANZ forecasts 9.7% home value growth for 2026, with the city's median values now sitting at 88% of the national capital city average, up from a 53-year average of just 78% [7]. This convergence story has further to run.

The STR performance metrics for Q2 2026 confirm Brisbane's maturation as a serious short-term rental market. Brisbane City properties are delivering an average annual revenue of $70,405 at a 68% occupancy rate with an average daily rate of $282 [8]. The broader market shows daily rates between $220 and $273, with occupancy ranging from 61.4% to 75.5% and annual revenue potential of $49,300 to $75,200 [4].

The critical context is Brisbane's rental vacancy rate of 0.8%, the lowest of any Australian capital city [3]. The REIQ's March Quarter 2026 data shows Queensland's statewide vacancy dipping further to 0.9%, down from 1.0% in the previous three quarters [9]. Annual house rent growth came in at 6.5% in April [10]. This extreme tightness in the long-term rental market is creating a structural floor under STR demand, as corporate relocations, insurance placements, and displaced tenants increasingly turn to short-term accommodation as their only viable option.

For Letto Property Group's Brisbane portfolio, Q2 has seen a notable increase in mid-week corporate bookings and insurance-related placements, with average length of stay extending from 4.2 nights in Q1 to 5.8 nights in Q2, a trend that materially improves net yield by reducing turnover costs.

Gold Coast: Sustained Dominance

The Gold Coast maintains its position as Australia's highest-yielding short-term rental market, a title it claimed in our Q1 Index and has defended convincingly through Q2. The data is unambiguous: daily rates between $291 and $416, occupancy from 55.9% to 73.7%, and annual revenue potential ranging from $59,400 to $111,900 [4].

The Gold Coast's premium positioning is driven by its unique demand profile. Unlike Sydney, where corporate and business travel provides a consistent weekday base, or Brisbane, where the rental crisis is channelling necessity-driven demand, the Gold Coast benefits from a layered demand structure: domestic leisure (Webjet reported a 35% year-on-year increase in Gold Coast bookings), international tourism recovery, events-driven peaks (Cooly Rocks On, Gold Coast Marathon, Bleach Festival), and an increasingly significant corporate retreat and incentive travel segment.

Population growth continues to underpin long-term fundamentals, with the city having surpassed 700,000 residents in 2025. Property values have appreciated 80% over five years, yet the STR yield compression that typically accompanies such appreciation has not materialised, a testament to the Gold Coast's expanding demand base outpacing supply growth.

Letto Property Group's Gold Coast portfolio recorded its strongest Q2 in operational history, with median annual revenue per listing of $96,000 and our top-performing properties exceeding $130,000 in annualised revenue.

Comparative Performance Analysis: Q1 vs Q2 2026

The following table presents a quarter-on-quarter comparison across our three core markets, illustrating the trajectory of key performance indicators.

Sources: Letto Property Group Proprietary Data; Cotality HVI April 2026 [1]; SQM Research [2]; REIQ [9]; Hometime [4]; GuestFavorites [8]

The Regulatory Landscape: Navigating Change

Q2 2026 has been defined by an escalation in regulatory discourse around short-term rentals. The City of Sydney investigation, Victoria's short-stay levy (which has demonstrably slowed listing growth in that state), and ongoing discussions in Queensland about registration frameworks all point to a sector that is transitioning from its unregulated adolescence into a mature, professionally governed industry.

Letto Property Group welcomes this transition. As a licensed real estate principal agency, we have always operated within the regulatory framework that is now being extended to the broader market. The implications for our clients are overwhelmingly positive: reduced competition from non-compliant operators, increased barriers to entry for amateur hosts, and a regulatory environment that rewards professional management, compliance, and quality.

Forward Outlook: Q3 2026

Three factors will shape STR performance through the winter quarter:

The first is the domestic travel pivot. Global uncertainty and a weakening Australian dollar are driving a sustained shift toward domestic holidays, with the Gold Coast and regional NSW the primary beneficiaries. Winter school holidays and the June long weekend will provide the first test of this thesis.

The second is the rental crisis deepening. With national vacancy at 1.6% and Brisbane at 0.8%, the structural demand for short-term accommodation from displaced renters, corporate relocations, and insurance placements will intensify through winter.

The third is regulatory clarity. The outcomes of the City of Sydney investigation and any further state-level announcements will provide the market with the certainty it needs to plan long-term investment strategies.

Letto Property Group remains positioned at the intersection of these forces: a licensed agency with the compliance infrastructure to navigate regulation, the technology stack to optimise yield in a competitive market, and the local teams to deliver the guest experience that drives repeat bookings and premium pricing.

References

[1] Cotality 2026, Home Value Index April 2026, Cotality, Sydney. Available at: https://www.cotality.com/au/insights/articles/home-value-growth-eases-nationwide-led-by-declines-in-sydney-and-melbourne

[2] SQM Research 2026, National Vacancy Rate Falls to 1%, SQM Research, Sydney. Available at: https://sqmresearch.com.au/uploads/14-04-26-National-Vacancy-Rates-March-2026-2016.pdf

[3] Macrobusiness 2026, New data shows Australia's rental crisis worsening, Macrobusiness, 30 April.

[4] Hometime 2026, Is Airbnb Profitable in Australia?, Hometime, 15 April. Available at: https://www.hometime.io/blog/how-much-will-i-earn-building-a-business-case-for-your-airbnb-listing

[5] ABC News 2026, City of Sydney to investigate ban on short-term rentals, ABC, 29 April. Available at: https://www.abc.net.au/news/2026-04-29/city-of-sydney-investigate-ban-on-short-term-rentals/106619040

[6] The Guardian 2026, Short-stay Street: in some parts of Sydney, Airbnb guests outnumber residents, The Guardian, 10 May.

[7] ANZ Research 2026, Brisbane Property Market Forecast, cited in PropertyUpdate.com.au, May 2026.

[8] GuestFavorites 2026, Brisbane City Airbnb Occupancy Rates and Revenue Data, GuestFavorites, May 2026.

[9] REIQ 2026, Queensland rental vacancy rates hit record lows in March Quarter 2026, The Real Estate Conversation, 30 April.

[10] Real Estate Business 2026, Brisbane property market update, April 2026, Real Estate Business, May 2026.