The introduction of Victoria’s Short Stay Accommodation Levy and increased land taxes have led to a rise in ex-rental and holiday home listings in Rye and Rosebud. This has created downward pressure on entry-level properties below $1 million, while premium properties over $1 million continue to sell well and often exceed expectations (Barry Plant Dromana, early 2026).
Investor sentiment has shifted as the cost of holding non-principal place of residence properties increases. We are seeing a distinct divide in the market between affordable holiday assets and high-end lifestyle properties.
The impact of the Short Stay Accommodation Levy
The Short Stay Accommodation Levy requires hosts with bookings under $75,000 per year to register by 30 January 2026, while those above this threshold must lodge and pay quarterly. From 1 July 2026, a fixed charge component of the Emergency Services Levy increases for investment properties and holiday homes. This regulatory shift is prompting many short-stay owners to exit the market.
Supply trends in Rye and Rosebud
Listings in these areas are currently dominated by ex-rental properties and holiday homes being disposed of by investors facing higher interest rates and land tax (Barry Plant Dromana, early 2026). This surge in supply is specifically creating downward pressure on the segments of the market most reliant on short-term yield.
Performance by price bracket
Market response varies significantly by price point. Properties priced above $1 million are selling well and often above expectations (Barry Plant Dromana, early 2026). Conversely, entry-level properties below $1 million are now offering value opportunities as the market adjusts from the COVID peak.
The timing risk
Vendors are weighing the decision to sell before the 1 July 2026 Emergency Services Levy increase against broader regional signals. While some Peninsula suburbs have seen median house price drops of up to -3.2% (Barry Plant Dromana, early 2026), Mornington is currently in an “Accelerating Growth” phase (HtAG Analytics, March 2026). It remains unclear if this growth will offset the levy-driven supply increase in Rye and Rosebud.
| Suburb | Median House Price | Annual Growth |
|---|---|---|
| Mt Eliza | $1,692,000 | +0.9% |
| Safety Beach | $1,160,700 | +0.3% |
| St Andrew’s Beach | $1,593,700 | +0.5% |
Frequently asked questions
What is the Short Stay Accommodation Levy?
It is a Victorian levy on Airbnb and Stayz-style bookings. Hosts earning under $75,000 annually had to register by 30 January 2026, while those earning more must lodge quarterly. Additionally, the Emergency Services Levy fixed charge for non-principal residences increases from 1 July 2026, increasing holding costs for investors.
Are entry-level holiday homes still a viable investment?
The market is adjusting from the COVID peak, and entry-level properties below $1 million are currently described as value opportunities (Barry Plant Dromana, early 2026). However, increased land tax, interest rates, and the new Short Stay Levy have led many investors to dispose of these assets.
How fast are properties selling on the Mornington Peninsula?
In Mornington, the median days on market for houses is 36–38 days, which is faster than the Victorian median of 42 days. Units are selling even faster, with a median of 30 days. The vacancy rate remains extremely tight at 0.6% (HtAG Analytics, March 2026).
Is there a difference in growth between houses and units?
In Mornington, while house prices have seen a correction from the COVID peak of between -2.73% and -4.11% (CoreLogic/OpenAgent), units have shown resilience. Unit medians sit between $755,000 and $760,000 with an annual growth rate of +8.8% (OpenAgent).
Questions to ask your agent
- How does the volume of ex-holiday rental listings in my specific street affect my current property appraisal?
- Are you seeing an increase in owner-occupier interest compared to investor demand following the Short Stay Levy?
- Does my property’s price point place it in the ‘value’ segment or the ‘premium’ segment based on current buyer behaviour?
This article contains general market information based on data current as at April 2026. It does not constitute financial, legal, or real estate advice specific to your property or circumstances. For an appraisal and tailored advice, speak with a Fletchers agent in your area.