Share houses make a comeback

Share Living houses make comeback as the rental crisis continues and people lease out spare rooms.

Why did people leave share houses during the pandemic?

A graph from Australia’s central bank shows the shift in household makeup that occurred at the start of the pandemic.

By mid-2020, the number of people living in share houses dived.

Some people moved back in with their parents, and there was also a noticeable uptake in people living with a partner.

Overall, the average number of people living in a property dropped.

Reserve Bank of Australia (RBA) data shows it was at its lowest ever-number at 2.47 people as of August last year.

CoreLogic property market analyst Tim Lawless has been watching the repercussions of this trend play out in the rental market.

“We saw some remarkable shifts at the beginning of COVID,” he says.

“For obvious reasons, people were looking for more space. They were moving away from inner-city areas towards the outer fringes. They were looking towards regional markets rather than capital cities.

“And the by-product of that demographic trend was that we started to see households becoming smaller.”

The RBA notes that our desire to live with fewer people wasn’t matched by the number of properties built during the last few years.

“This helps explain why rental vacancy rates quickly returned to low levels even though the international border was closed and population growth declined to be close to zero,” assistant governor Luci Ellis said in a speech last year.

“The desire for more space is one thing; the ability to get it is another.”

There are other reasons why supply may have been curtailed.

Aside from household formation patterns, many first-home buyers entered the market during the pandemic housing boom.

It is possible they bought properties that had once been share houses.

Some analysts have argued that migratory patterns, such as people moving to regional areas to escape cities in lockdown, and investors selling up properties, has also reduced the rental stock.

Mr Lawless believes the desire for space is still one of the biggest reasons for the supply crunch.

And right now, vacancy rates are still near the lowest they have ever been on CoreLogic’s records, at about 1.3 per cent nationally.

As we push into 2023, the number of places being listed for rent is 22 per cent lower than the five-year average, CoreLogic data shows, at about only 50,000 listings nationally.

Rents are still rising, albeit not as fast as they did last year when they surged 10 per cent in just 12 months.

The average price of a capital city rental is $577, and slightly less in the regions at $500. There are, of course, big variances depending on more granular location, and also whether the space is an apartment, unit or house.

“It does look like rental supply is going to remain very low at a time when demand is rising from overseas migration,” Mr Lawless says.

“The by-product, of course, is going to be further upward pressure on rents.”

“There’s a lot of negative social outcomes around increased homelessness, more couch surfing, more people moving back in with their parents.”

Mr Lawless predicts many people will be forced back into share housing, either by moving into those homes or by leasing out their spare rooms, simply because they have reached their limit on how much rent they can pay.

“We are going to see more and more share houses or group households forming simply due to the fact that rental markets are as tight as what they are,” he says.

Some research suggests this prediction is already a reality.

A website that lets people create a profile to join a share house, Flatmates.com.au, had its busiest month in January since the pandemic started.

More than 68,000 people signed up to the platform owned by the property website REA Group.

The website, which is one of the biggest of its type in the nation, has also seen a 20 per cent rise in visitation in 12 months.

“We saw the most new-seeker listings since March 2019,”  the website’s community manager Claudia Conley says.

This time of year is a traditionally busy period for share house formation, as students from both Australia and overseas look for accommodation before the university school year.

However, it’s not just the stereotypical student who is looking who are looking for co living properties.

“We’re actually seeing a large increase of people over the age of 55 looking for share accommodation,” she says.

“We also see a lot of single parents looking for other single parents to live with.”

Ms Conley is keen to promote the benefits of living with others. As well as cutting down on overheads, she says it’s also beneficial for people who may be experiencing loneliness or want to be around others post-pandemic.

However, Claudia believes the share house boom is definitely driven by the cost of living, with some people simply having no other option.

Property Management

With Shared living homes, you need to use a specialist co-living property management, as the process and management are different.

“There’s a really large amount of people looking for share accommodation. But unfortunately, there are not enough properties available to give everyone a place to live,” she says.

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