Shoalhaven home to more short term stays than Byron Bay

The number of short-term stays has risen by 15.1 per cent in the Shoalhaven in the past year with a total of 3634 short term stays according to a new report by the Real Estate Institute of Australia (REIA).

That puts it ahead of Byron Bay, which has 2155 short stays.

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"The eastern coast of Australia is the predominant provider of short-term accommodation, and where most of the crucial long-term housing is desperately needed," REIA president Hayden Groves said.

Nationally 133,968 short-stay accommodation (SSA) places were available in Australia, an increase of 22.8 per cent over the past year according to the report.

"As a crude equation, 133,968 on first glance appears to fill the forecast shortage of dwellings Australia will face by next financial year of 106,000," he said.

"While short stays accommodation has been an essential part of meeting high demand for domestic tourism accommodation, it is a driving factor behind the rental crisis."

The Shoalhaven's Huskisson-Vincentia area was in the top five places with the highest density of short stay accommodation.

Of the overall 3670 homes in the area, 791 were short-stay dwellings and an estimated 3670 private homes according to the report.

That means 21.6 per cent of all homes were available as short stay accommodation in the area.

In Callala Bay-Currarong 11.1 per cent of all homes were short stay accommodation.

Mr Groves said 109,726 (81.9 per cent) of short stay listings were dwellings that can transition between the long-term rental market and the short-stay accommodation market.

Craig McIntosh runs a holiday rentals business that oversees 250 properties.

Mr McIntosh's business, The Holidays Collection, manages properties throughout the South Coast and Southern Highlands.

He said the issue of whether there were too many short-term holiday rentals will "almost look after itself with market forces".

"We've had 10 years of amazing conditions for the property market generally - low interest rates, bullish economy, rising property prices.

"And a lot of people have jumped in, bought a house and decided they can holiday rent it, and make money from it."

However, Mr McIntosh believed there was now a shift occurring.

"Now I think we're coming into another 10-year cycle of sober, cautious, higher interest rates, and investors who will realise they can't make the quick buck out of property that they thought they could.

"Not so much in our portfolio, but I have heard anecdotally that some property owners are already switching their properties from holiday rentals to the permanent rental market.

"I think to a large extent a correction will happen anyway because of market forces."

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Mr McIntosh said higher interest rates, cost of living pressures and people catching up on overseas travel meant many property owners would move towards the security of a permanent rental.

"Or they will have to sell that property because they may have over-extended, and perhaps that property will find its way into the rental market," he said.

In the March quarter, a total of 44,887 short-stay accommodation places were available in NSW. Of these, 38.3 per cent were in Sydney and 61.7 per cent in regional NSW.

Mr Groves said the report comes at a time when vacancy rates in all our major cities and regions remain at critical lows.

"There needs to be a greater supply of properties generally in NSW, and Australia," he said.

"There needs to be more homes built, given the population growth."

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