The short stay rental market is currently increasing listing volumes on the Bellarine Peninsula as investors exit due to the Short Stay Accommodation Levy, higher land taxes, and interest rates (Barry Plant Dromana, early 2026). This has created a price divergence where premium properties above $1 million continue to sell well, while entry-level assets are undergoing a price correction.
The Bellarine Peninsula is experiencing a shift in listing composition. A growing number of holiday homes are entering the market as investors move away from short-term rentals to avoid new levies and rising holding costs. This influx of stock is most visible in the entry-level price brackets.
The impact of the Short Stay Accommodation Levy
Listings are currently dominated by ex-rental properties and holiday homes being disposed of by investors (Barry Plant Dromana, early 2026). This trend is driven by the combined pressure of the Short Stay Accommodation Levy, increased land tax, and higher interest rates. We are seeing more investment-grade stock hit the market simultaneously, which increases competition among sellers of similar assets.
Price divergence at the $1 million mark
There is a clear divide in how the market is absorbing this new supply. Properties priced above $1 million are selling well and often exceeding expectations. However, entry-level properties below $1 million are providing value opportunities as they adjust from the COVID peak.
Coastal town performance
Ocean Grove, the largest residential market on the Bellarine, has seen an annual price correction of -6.19%, with a median house price of approximately $1,039,067 (CoreLogic/Cotality/Domain/PropTrack/REIV/RBA/ATO). Despite this, its five-year average annual growth remains 7.38% (CoreLogic/Cotality/Domain/PropTrack/REIV/RBA/ATO). In contrast, Barwon Heads, Point Lonsdale, and Queenscliff maintain premium prices due to very tight supply and strong lifestyle buyer demand.
The supply-absorption risk
The primary uncertainty is whether the volume of exiting short-stay investors will outpace the demand from permanent residents and lifestyle buyers. While premium assets remain resilient, the entry-level market is more vulnerable to the increased volume of available stock.
| Location | Median House Price | Annual Growth/Change |
|---|---|---|
| Ocean Grove | $1,039,067 | -6.19% |
| Geelong (Greater) | $890,000–$945,000 | +1.2% (through 2025) |
| Manifold Heights | $1,160,000 | +4.3% |
| South Geelong | $938,337 | Not specified |
Frequently asked questions
How is the short stay levy affecting Bellarine house prices?
The levy is prompting investors to list holiday homes for sale to avoid increased costs (Barry Plant Dromana, early 2026). This has increased supply, particularly for entry-level properties under $1 million, which are seeing price corrections as the market adjusts from previous peaks.
Are premium coastal properties still selling well?
Yes. Properties priced above $1 million on the Bellarine Peninsula continue to sell well and frequently exceed expectations. This is supported by limited supply in premium pockets like Barwon Heads and Queenscliff, where lifestyle buyer demand remains consistently high.
Which areas of the Bellarine have the strongest buyer enquiry?
Armstrong Creek is seeing the strongest buyer enquiry levels in two years (Bellarine Times, late 2025). This growth corridor continues to attract interest due to new estates and its proximity to the coastal towns of the Peninsula.
What is the current rental yield in the gateway region?
In the Greater Geelong City area, the gross rental yield is approximately 2.91% (HtAG Analytics). The vacancy rate is sitting at 1.6%, which is considered to be within the neutral range for the region.
Questions to ask your agent
- How does the current volume of ex-rental listings in my specific suburb compare to owner-occupied stock?
- What is the current buyer profile for properties under $1 million versus those over $1 million in this pocket?
- How has the Short Stay Accommodation Levy shifted the comparable sales data for similar holiday homes in my street?
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.