New data from short-term rental research firm AirDNA has revealed one particular coastal holiday spot has seen prices surge 38 per cent in the last 12 months.

In January 2022, the average daily rate for an Airbnb or Stayz property in Broulee was around $497, up from $360 the year prior.

In Mollymook Beach, holiday rentals jumped from $451.12 per night in January 2021, to $581 this January representing a 29 per cent increase.

The two coastal towns outpaced state and national growth in the average daily rates, which was 12 per cent across New South Wales and 13 per cent across all Australian properties.

AirDNA territory manager for Australia Ellie Mann said demand for larger properties during COVID was a major factor in the growth.

"The difference between these towns is notable where there is more supply that can house the families and larger groups looking for accommodation," she said.

"Three-bedroom properties dominate in Broulee, where average daily rates have increased 38 per cent from last year and 86 per cent from 2019."

Holiday rentals listed through independent real estate companies are also seeing similar price hikes.

Chris Coffey, principal at Mum Real Estate, said holidaymakers are paying, on average, an additional $1000 per week for a three- to five-bedroom home on the South Coast since the COVID pandemic began.

"People just aren't travelling overseas so we're finding people are holidaying down here, or since the lockdowns, they've decided to actually buy a holiday home," he said.

Ms Mann said while most of Australia has seen a drop in short-term rental supply throughout the pandemic, Mollymook Beach listings on Airbnb and Stayz have increased 16 per cent since 2019.

"This is likely down to new hosts investing in property or renting out their own homes at least part-time," Ms Mann said.

But Mr Coffey said the increased supply has been quickly snapped up.

"There are more holiday homes coming on the market but, at the same time, there's four times the amount of tenants looking to holiday down here," he said.

Reports of rising holiday rental prices emerged in December last year, as Canberra and Sydney competed for coastal properties in the Christmas holidays. Around the same time, South Coast business owners struggled to retain local staff, saying an influx of Airbnbs was pushing young people out of the rental market.

Melissa Franzen of South Coast Property Specialists said the holiday rental market underwent a "complete overhaul" in recent years.

"If you rented something here 30 years ago and you turned up and it was dusty, it was kind of no big deal," she said.

"Now people are expecting properties to be to the same standard of quality hotels. Understandably, I mean, they're paying good money to stay in these houses."

In December 2020, NSW introduced a code of conduct for the short-term rental market. Meanwhile new planning laws came into effect late last year to ensure consistent regulation, including fire safety standards, across short-term rentals in NSW.

Ms Franzen believes these factors have also contributed to rising prices.

"The changes are very welcome ... but changes come with a cost and that cost has forced some people out of the market," she said.

For those looking for a better deal, Mr Coffey said outer suburbs are the place to look. He said travellers who are happy to drive to the beach, rather than walk, will be able to secure lower prices.

"Ulladulla or Milton [where it's a] five minute drive to the beach, you'll get a lot more value for money ... potentially $1000 or $2000 less per week," he said.

Despite the price hikes across South Coast short-term rentals, demand has remained strong.

"Twenty years ago, it wouldn't be uncommon for someone to walk into the office and say 'I just want to rent this out for a few weeks over Christmas'. That's now not feasible because of the cost to get into the market," Ms Franzen said.

She said many groups are willing to pay a premium, or even "layby" their holiday, to secure a spot.

"They'll book early in the year, they'll pay it off in regular small installments. So the price changes aren't really deterring them," Ms Franzen.

Mr Coffey doesn't expect the demand to ease for some time.

"We've got a lot of bookings outside of holiday periods, so I think it'll continue on for the next sort of three to six months and certainly next summer is going to be really busy as well," he said.

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The data backs it up, too. In the last week of February, AirDNA tracked 500,000 new nights booked for future travel across Australia, up from just 200,000 per week in December.

"In January, nearly two million nights were booked, up 28 per cent from a year before," Ms Mann said.

"With the border reopening to vaccinated travellers, pent-up demand could make 2022 a very successful year for Australian short-term rentals."

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