Co-living developments on track to take off in Australia's major cities

Co-living arrangements are set to boom in Australia’s inner-city suburbs, bringing opportunities to both property investors and renters.

Houses in multiple occupation (HMO) are on track to see rapid growth in Australia’s major cities, as a means of resolving the supply and affordability challenges of urban property markets.

A recent report from Savills forecasts that the global trend of sophisticated communal lifestyle spaces will soon become highly popular in the downtown areas of Sydney and Melbourne.

HMOs not only help to raise density levels in existing urban areas, they also cater to the changing lifestyle and accommodation needs of affluent young professionals.

What is HMO?

HMO and co-living arrangements are closely related concepts and refer to unrelated occupants living together in the same residential property.

For many, the idea may summon to mind the traditional share house that has long been a rite of passage for younger Australians who are studying or entering the workforce.

Modern co-living arrangements differ in that they provide higher quality accommodation that caters to the needs of urban professionals working in downtown areas.

While share houses were once considered a downmarket option, an increasing number of affluent professionals are willing to participate in co-living arrangements, due to the surging cost of inner-city property.

“In Sydney and Melbourne rents have absolutely skyrocketed,” said Cheryl Leong, chief impact officer at co-living property developer Big Impact Group.

“You’re finding the people are paying rents for a one bedroom apartment that might be $500 - 600 a week, and that’s not sustainable for most people who are young professionals.”

Unlike traditional share houses, modern HMOs better cater to the needs of these professionals by providing them with their own self-contained living spaces, alongside shared living spaces.

“In Melbourne, we found that people want rooms with their own toilets, en suites and little kitchenettes, so they can have their own space without needing to share these key amenities,” Leong said.

Co-living arrangements could take off in Australian cities

Co-living arrangements are on track to become increasingly popular in Australia, due to the large number of young white-collar professionals who want affordable, high-quality accommodation close to their jobs.

An analysis from Savills found that 1.46 million 25-34 year olds in Australia rent, while a quarter of a million of them live on their own, and more than 18% earn more than the national average income. This provides a sizeable market for high-quality co-living arrangements.

The viability of co-living arrangements for urban markets is proven by the fact that key hotspots for HMOs are all situated in the most popular inner-city suburbs of Australia’s biggest cities.

According to the Savills analysis these include Redfern, Chippendale, Potts Point, Surry Hills and Newtown, in Sydney, as well as Richmond, St Kilda, Brunswick, Hawthorn and Carlton in Melbourne.

Co-living arrangements bring opportunities to investors

Given the co-living market is on the verge of major growth in Australia, it will also be a major source of opportunity for investors.

Investors can tap into these opportunities via specialised marketplace lenders such as CrowdProperty that possess strong development expertise when it comes to providing investors with the opportunity to invest in residential development projects.

CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.