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Based on today's news article Melbourne's hosts income dropped 40% because of the over supply

I don’t live in Melbourne (I’m from Buenos Aires) but the same is happening here, and I believe it will affect the majority of the major cities Airbnb is present. The supply is growing 50% per year but the demmand is steady. Preparing a furnished, well appointed apartment for the short term rental isn’t a small investment, so why people do it without knowing the true income they will get and the risks that are involved? I listed my place back on 2011 when there was a small subset of properties than now. I would probably think it twice to add a new one now that I know how hard it is to get booked.

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Am I missing something? I quickly read the article and in the first paragraph it says the drop was 32%, which is not great but it’s not horrible.

I am thinking it is a good thing that my city put a STR ordinance into effect on January 1 of this year, which restricts Air-type rentals to owners-only for primary residences, one only per owner, and they must be licensed. All renters (as opposed to owners) are illegal, even for a room-only STR. So far, I’m on par with last year, even though my prices are higher. So, maybe regulations are not such a bad thing, after all.

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Yes, the headline of the article mentioned 40% and then it said 32% but it doesn’t matter the number. What the article is pointing out is that Melbourne STR aren’t a great deal against going LTR.
STR involves the risk of having months of low occupancy and besides there is more extra work involved than LTR.

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For sure. When the income from STR drops a lot it only makes sense to revert to LTR. The market will correct itself when there are so many people getting into the act thinking they’re going to make a killing.

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