Rye and Rosebud are transitioning toward a lifestyle-driven market as the Short Stay Accommodation Levy prompts investors to sell. This has increased the supply of ex-rental holiday homes, putting downward pressure on entry-level price points while premium properties continue to perform well.
The balance is shifting due to legislative changes and holding costs. Investors are increasingly disposing of holiday homes in response to the Short Stay Accommodation Levy, increased land tax, and higher interest rates.
The impact of the Short Stay Accommodation Levy
The Victorian Short Stay Levy requires registration for hosts earning under $75,000 and quarterly payments for those above that threshold as of January 2026. From 1 July 2026, the Emergency Services Levy increases for properties that are not a principal place of residence. This is driving a surge of ex-rental properties into the sales market in Rye and Rosebud.
Buyer profiles and demand
Demand is split between permanent residents, including a large retiree population aged 70–79, and Melbourne buyers seeking weekenders. Supply remains constrained by the Peninsula’s geography and Green Wedge zoning, which prevents significant urban expansion.
Price performance by segment
Properties priced above $1 million are selling well and often above expectations. Conversely, entry-level properties below $1 million currently offer value opportunities as the market adjusts from the COVID boom, with some coastal suburbs recording median house price drops of up to -3.2% (Barry Plant Dromana, early 2026).
The supply timing risk
There is significant uncertainty regarding the volume of listings that will hit the market ahead of the 1 July 2026 Emergency Services Levy increase. This could create a temporary oversupply of investment-grade stock, making it difficult to establish a price floor for properties under $1 million.
Frequently asked questions
Why are investors selling properties in Rye and Rosebud?
Investors are exiting the market due to the introduction of the Short Stay Accommodation Levy and rising land tax and interest rates. Many ex-rental and holiday homes are being listed as the cost of holding non-principal place of residence properties increases, particularly ahead of July 2026 changes.
Is there still demand for rental properties on the Peninsula?
Yes, demand remains high. The vacancy rate is currently 0.6%, which is considered extremely tight. While some investors are selling due to tax and levy changes, the lack of available rental stock continues to support the market for permanent residents and tourists.
How are premium properties performing compared to entry-level homes?
There is a clear divergence in the market. Properties priced above $1 million are selling well and often exceeding expectations. Properties below $1 million are seeing more downward pressure and are viewed as value opportunities as the market adjusts from previous peaks.
What is the current growth phase for the Mornington Peninsula?
Mornington is currently in the “Accelerating Growth” phase of the property cycle (HtAG Analytics, March 2026). Historically, suburbs in this phase maintain momentum for 12–18 months, a trend also seen in neighbouring suburbs like Balnarring and Baxter.
Questions to ask your agent
- How has the Short Stay Accommodation Levy specifically affected the number of comparable sales in my street over the last six months?
- What is the current buyer appetite for non-principal place of residence properties compared to permanent residences in this suburb?
- How does the Green Wedge zoning specifically impact the long-term land value and development potential of my property?
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.