Does a 180-day cap on short-term rentals affect housing markets? Evidence from regional New South Wales

With a strong post-pandemic rebound in domestic and international travel, debates regarding how best to regulate short-term rentals have surfaced as a key policy topic. This paper examines the dynamic causal impacts of a 180-day cap on short- and long-term rental markets in multiple regions in New South Wales, Australia. The analysis reveals a temporary reduction of active short-term rentals during the early implementation, which quickly dissipated. No evidence is found for the cap having any sustained impact on long-term rent levels. The results suggest that without effective enforcement, a 180-day cap alone may be insufficient to achieve policy objectives.