Tourism’s Impact on Australia’s Real Estate Market

Published on November 26, 2025 and written by Cyril Jarnias

Australia, a land of breathtaking landscapes and rich biodiversity, is seeing its real estate market transformed by a significant increase in tourism. As travelers flock to discover the hidden treasures of this continent, the economic impact extends far beyond gains for the hospitality and restaurant industries.

Real estate investors, drawn by enticing prospects, are driving up prices in previously preserved regions. This raises the question: what are the real effects of tourism on the Australian real estate market?

This article examines the complex dynamics between the tourism boom and real estate changes, revealing major challenges for local communities and economic stakeholders.

Australia’s Most Popular Tourist Areas

Sydney, Melbourne, Gold Coast, the Great Barrier Reef, Kakadu, and Uluru are among Australia’s main tourist regions. These areas attract millions of visitors each year thanks to their natural diversity, cultural richness, and multiple entertainment options.

Region	Natural Beauty and Attractions	Cultural Activities	Entertainment	Annual Visitor Count (estimate)
Sydney	Harbor, beaches (Bondi, Manly), Opera House	Museums, festivals, Aboriginal heritage	Nightlife, restaurants, shopping	~4 to 5 million (pre-COVID)
Melbourne	Gardens, Great Ocean Road, Yarra Valley	Art, cuisine, sporting events	Bars, theater, markets	~2 to 3 million
Gold Coast	Beaches, rainforests, theme parks	Surfing, festivals, local heritage	Amusement parks, casinos	>1 million
Great Barrier Reef	Coral reefs, islands, Daintree Rainforest	Marine culture, Indigenous traditions	Diving, cruises, ecotourism	>2 million
Kakadu National Park	Forests, waterfalls, exceptional biodiversity	Aboriginal rock art, sacred sites	Hiking, wildlife watching	~200,000
Uluru (Ayers Rock)	Monolith, desert, Red Centre landscapes	Aboriginal spirituality, art	Hiking, guided tours	~300,000

Special Attractions of These Regions:

• Natural Beauty: white sand beaches, rainforests, coral reefs, deserts, and iconic rock formations. The Great Barrier Reef and Uluru are UNESCO World Heritage sites.
• Cultural Activities: strong presence of Aboriginal heritage (Kakadu, Uluru), world-renowned museums in Sydney and Melbourne, artistic and sporting festivals.
• Entertainment: theme parks (Gold Coast), nightlife (Sydney, Melbourne), cruises, surfing, diving, and exceptional hiking.

Statistics and Tourism Impact:

• Australia welcomed approximately 7.8 million international visitors in the year ending June 2025. The regions of Sydney, Melbourne, and Queensland (Gold Coast, Great Barrier) concentrate the majority of these flows.
• Tourist arrivals are expected to continue increasing, reaching nearly 1.3 million per month in 2026-2027.
• The tourism sector represents over $14 billion in annual revenue, with projected growth of nearly 3% per year until 2035.

Influence on Real Estate Demand:

• The influx of tourists stimulates demand for hotels, seasonal rentals (Airbnb, apartments), and vacation homes.
• In highly sought-after areas, the proliferation of short-term rentals has led to rising real estate prices and a scarcity of available housing for permanent residents.

Effects on Housing Prices and Availability for Locals:

• Rising real estate prices in tourist centers, particularly in Sydney, Melbourne, and the Gold Coast.
• Decrease in long-term rental supply due to the conversion of many properties into tourist rentals.
• Strain on local residents, especially young people and middle-income households, who struggle to find housing near employment and activity centers.

Factors That Could Influence Future Trends:

• Tighter regulation of short-term rentals to protect local housing access.
• Development of new hotel infrastructure in high-demand regions.
• Variations in international tourism related to global conditions, climate events (fires, cyclones), and promotion of sustainable tourism forms.

Key Takeaway: Australia’s exceptional tourism appeal profoundly shapes the real estate dynamics of its flagship regions, creating opportunities for investors while posing accessibility challenges for local populations.

The Rise in Real Estate Prices Due to Tourism

The rapid development of tourism in Australia has significantly contributed to rising real estate prices, particularly in regions highly favored by visitors.

In coastal cities and iconic destinations such as Sydney, Melbourne, Gold Coast, Byron Bay, and Cairns, increased housing demand, fueled by tourist influx and the growth of short-term rentals (like Airbnb), has intensified pressure on the residential real estate market.

City / Region	Recent Real Estate Price Trends	Aggravating Factors
Sydney	+0.7% in October 2025; national median at $872,538 AUD	Short-term rentals, international demand
Melbourne	+0.9% in October 2025	Tourist appeal, housing shortage
Perth	+1.9% in October 2025	Rising demand, foreign investments
Byron Bay	High inflation over 10 years	Overtourism, real estate speculation
Gold Coast	Steady increase since 2020	Seasonal rentals, investor purchases

Key Factors in Rising Real Estate Prices in Tourist Areas:

• Increased demand for short-term rentals: The proliferation of platforms like Airbnb encourages owners to favor tourist rentals, reducing supply for permanent residents and driving up prices.
• Interest from foreign investors: The influx of international capital, particularly from large investment groups, intensifies competition and property valuation, mainly in high-visibility tourist areas.
• Housing shortage: The national rental vacancy rate has fallen to 1.4%, a historically low level, increasing competition for remaining housing.
• Public policies: Some measures facilitating home ownership or construction can increase demand without solving the structural shortage in tourist areas.

Consequences for Local Residents:

• Greatly reduced housing accessibility, especially for low-income households or young first-time buyers, facing increased competition and scarcity of affordable housing.
• Rising rents, with a 0.5% increase in the last quarter of 2025, making renting increasingly difficult for residents, particularly in central and beachside neighborhoods.
• Displacement of local populations to suburbs or less attractive regions, a phenomenon often referred to as “tourism gentrification.”

Recent Statistical Illustration:

• In October 2025, the median value of Australian homes reached $872,538 AUD, a 1.1% increase in one month, the strongest growth since June 2023.
• The lower quartile and mid-range of the real estate market are experiencing the fastest increases, particularly affecting local populations with average or modest incomes.

Recent studies show that the tourism boom, combined with increasing real estate financialization and the popularity of tourist rentals, constitutes a major driver of real estate inflation in attractive areas, jeopardizing social diversity and housing accessibility for permanent residents.

Rental Investment: A Golden Opportunity

Australia is currently experiencing a remarkable tourism recovery that is reshaping the country’s economic landscape and creating unprecedented investment opportunities in the rental real estate sector. This dynamic is based on solid fundamentals and statistical data that indicate a sustained upward trajectory.

Tourism Recovery and Exceeding Pre-Pandemic Levels

In September 2025, international arrivals in Australia crossed a symbolic threshold by exceeding for the first time the volumes recorded in 2019. The Australian Bureau of Statistics recorded 696,500 short-term foreign visitors that month, marking the full return of the tourism sector to pre-pandemic levels. In the fiscal year ending June 2025, the country welcomed 7.8 million international visitors, generating estimated tourism expenditures of $55.4 billion, a 16% increase compared to the previous year.

Economic projections indicate a continuation of this growth. By the end of the current quarter, tourist arrivals are expected to reach 1,000,600 visitors, with long-term forecasts estimating approximately 1,280,600 arrivals in 2026 and 1,350,600 in 2027. This upward trajectory is supported by substantial investments in airport infrastructure and global marketing campaigns such as “Come and Say G’day” launched by Tourism Australia.

Visitor Origins and Destination Preferences

Data reveals a geographic concentration of visitors from key markets. New Zealand, China, the United Kingdom, the United States, and Singapore dominate the ranking of countries of origin. This diversification of tourism sources strengthens demand stability and creates investment opportunities in major urban areas that host these visitors.

International visitor spending amounts to 13 billion Australian dollars for the year up to June 2025, representing a 27% increase compared to the previous year. These revenues are partly reinvested in terminal renovations and biometric technology improvements, thereby strengthening the country’s tourism infrastructure.

Impact on the Rental Real Estate Market

The tourism growth directly fuels short-term rental demand, particularly in urban and coastal areas where visitors concentrate. The increase in international arrivals creates heightened demand for alternative accommodation, especially furnished rentals and tourist apartments, a sector where rental yields can significantly exceed traditional residential rental rates.

Real estate investors benefit from this dynamic through several mechanisms:

• High occupancy rates: Tourist areas benefit from annual occupancy rates higher than traditional residential averages, thereby reducing property idle periods.
• Premium rents: Tourist accommodation commands substantially higher daily or weekly rates than standard residential leases, generating attractive gross returns.
• Income diversification: Owners can adapt their rental strategy according to tourist seasons, combining short-term rentals during peak periods with residential contracts during off-peak times.

Australian Real Estate Market Outlook

The Australian travel and tourism market was valued at $14.6 billion in 2024 and is expected to grow at a compound annual rate of approximately 2.95% between 2025 and 2035, reaching $20.1 billion by 2035. This sustained growth is propelled by increasing incomes, the emergence of new digital travel platforms, and growing interest in unique and sustainable tourism experiences.

High airfares constitute a structural favorable factor for investors. High-season fares to the United States and Europe remain about 15% higher than 2019 levels, which should maintain high travel budgets until 2026 and support tourist accommodation prices.

Recommendations for Investors

To maximize returns in this context of tourism growth, investors should adopt a multidimensional strategy:

• Strategic geographic selection — Prioritize major urban areas and coastal destinations that concentrate international visitors. Regions served by direct international flights offer superior accessibility and justify premium accommodation prices.
• Product positioning — Invest in properties located near major tourist attractions and commercial centers. Modern accommodations with integrated tourist services (high-speed WiFi, kitchen facilities, workspaces) command higher rates.
• Active rental management — Adopt dynamic pricing management based on seasonality, local events, and market trends. Owners using sophisticated digital platforms can optimize allocation of short and long-term rental periods.
• Trend anticipation — Secure property purchase agreements as soon as possible, particularly for areas set to benefit from future tourism developments. Organizations and investors are encouraged to anticipate accommodation needs for the second and third quarters.
• Sector diversification — Consider investing in properties that can serve both tourist and residential markets, thereby reducing risk related to tourism flow volatility.

The convergence between structural tourism recovery and growing accommodation demand positions Australia as a particularly attractive rental real estate market for investors seeking high and sustainable returns.