Lavender Bay Short-Term Rental (Airbnb) Market
Lavender Bay NSW Investment Analysis
BUY
— $2,887,240 median with 7.9%/yr growth over 5 years.
THE MARKET
Lavender Bay has compounded at 7.9%/yr over 5 years — a house that cost $1,974,130 in 2021 is worth $2,887,240 today. Properties are sitting on market for 47 days (roughly balanced conditions). At the same growth rate, today's median reaches $4,222,699 by 2031.
- **Median house:** $2,887,240 | **Units:** $1,660,026 - **Gross yield:** 1.3% | **Net yield:** -0.2% - **5yr price CAGR:** 7.9%/yr | **3yr forecast:** 8.9%/yr - **Population:** 18,892 | **Owner-occupier rate:** 34% | **Affluence:** Very High
- **Supply pipeline:** Low — Price growth outpacing new supply, limited development pipeline
RENTAL SNAPSHOT
- **Vacancy:** 2.6% (stable) | **Rental demand:** Moderate - **Median weekly rent:** $745/wk | **Days on market:** 47 (worsening) - Balanced market — vacancy manageable but monitor trend.
SHORT-TERM RENTAL
- **Median nightly rate:** $195/night | **Occupancy:** 68% - **Estimated annual STR gross:** ~$48,399/yr - **vs long-term rent:** $38,740/yr (+25% STR premium — factor in higher management costs)
INFRASTRUCTURE & CATALYSTS
- No major confirmed infrastructure projects on record. - **Transport:** Well-connected inner-city location
BULL CASE
If Lavender Bay maintains 3%+ annual growth and vacancy stays below 1.8%, median prices could reach $3,320,326 within 3 years with yields compressing slightly as capital values rise.
BEAR CASE
A market correction or interest rate shock could see prices in Lavender Bay pull back 10-15% from $2,887,240, with vacancy rising to 4.7% and rental yields softening as tenants gain leverage.
KEY RISKS
- Premium price point limits buyer pool and increases interest rate sensitivity
COMPARABLE MARKETS
- **Zetland** (NSW): $2,610,153 median, 2.0% yield, 8.7% 1yr growth - **Glebe** (NSW): $2,700,000 median, 1.8% yield, 3.3% 1yr growth - **Watsons Bay** (NSW): $2,733,804 median, 3.1% yield, 14.7% 1yr growth
THE PLAY
Lavender Bay presents a compelling investment opportunity. The combination of solid fundamentals and moderate rental demand supports entry at current price levels. Proceed with due diligence on specific properties. Target gross yields above 1.3% and prioritise properties with value-add potential. Consider timing entry around the current growth phase of the market cycle.
- Entry range: $2,598,516 – $3,175,964 - Minimum gross yield to target: 4.5% - Watch signal: vacancy dropping below 2% and days on market falling below 35
This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.
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Analyse a Property →Data sourced from ABS, state government property sales, and Airbnb market analytics. For informational purposes only — not financial advice.