The primary difference is the current volume of supply. Rye and Rosebud are experiencing downward pressure as the Short Stay Accommodation Levy prompts owners of holiday rentals to exit the market. Sorrento and Portsea are less affected by this specific supply surge, although Sorrento has seen median house price drops of up to -3.2% (Barry Plant Dromana, early 2026).
The divide between the mid-Peninsula and the far end is currently defined by regulatory pressure. While the broader region is in an “Accelerating Growth” phase (HtAG Analytics, March 2026), specific suburbs are reacting differently to the new short-stay tax regime.
The Short Stay Levy supply surge
Rye and Rosebud are seeing an increased supply of ex-holiday-rental properties returning to the sales market. This is driven by the Short Stay Accommodation Levy, which required registration by 30 January 2026 and introduces increased fixed charges for non-principal residences from 1 July 2026. This increase in available stock is creating downward pressure on prices in these specific segments.
High-end market stability
Sorrento and Portsea remain driven by the Melbourne weekender and holiday home buyer pool. While Sorrento recorded median house price drops of up to -3.2% (Barry Plant Dromana, early 2026), these areas are not listed as primary zones for the levy-driven supply increase seen in Rosebud and Rye. Properties in this price bracket, typically above $1.5 million, continue to be marketed via private treaty or Expressions of Interest (EOI).
Broader Peninsula demand
Despite localized price corrections, the Mornington Peninsula is in an “Accelerating Growth” phase (HtAG Analytics, March 2026). Demand is supported by an extremely tight vacancy rate of 0.6% and a selling speed of 36 days, which is faster than the Victorian median of 42 days. This suggests a broader re-rating of the Peninsula is underway.
The levy exit volume
The real uncertainty is the total volume of owners in Rye and Rosebud who will list their properties before the 1 July 2026 fixed charge increase. It is unclear if the current downward pressure is a short-term spike in supply or a longer-term shift in investor sentiment for the mid-Peninsula.
Frequently asked questions
How does the Short Stay Levy affect property prices in Rosebud?
The levy is increasing the supply of properties returning to the sales market as owners move away from Airbnb and Stayz-style rentals. This increase in available stock is creating downward pressure on house prices in Rosebud, Dromana, and Rye as more ex-holiday homes compete for buyers.
What is the best sale method for a high-end Portsea property?
For properties priced above $1.5 million on the Peninsula, private treaty or Expressions of Interest (EOI) are the dominant methods. Auctions are typically reserved for properties between $700,000 and $1.2 million where there is broad family appeal or high buyer competition.
Is the Mornington Peninsula still a viable investment?
The region shows strong fundamentals with a very tight vacancy rate of 0.6% and an “Accelerating Growth” phase assessment (HtAG Analytics, March 2026). While some suburbs have seen corrections of up to -3.2% (Barry Plant Dromana, early 2026), the long-term momentum is historically positive.
How long are houses taking to sell on the Peninsula?
The median selling speed on the Peninsula is currently 36 days. This is notably faster than the Victorian median of 42 days, indicating that demand remains strong despite recent price adjustments in certain coastal suburbs.
Questions to ask your agent
- How many current listings in our immediate street are former short-stay rentals?
- What is the current ratio of permanent resident buyers versus Melbourne weekenders for this specific property type?
- Given the current supply in Rye and Rosebud, would an EOI period better protect the price than a private treaty?
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.