Co-living: can it work in Australia?

July 19, 2018 / By  

Co-living arose out of growing social and housing challenges  

Co-living is touted as the next step in housing evolution due to its potential to resolve a number of modern housing and social challenges. From a planning point of view, sharing more of our living space would relieve pressure on urban sprawl and infrastructure as city populations continue to rise. From a social point of view, co-living can prevent isolation, create social integration and a greater sense of community. Co-living is also in line with the broader ‘sharing economy’ trend that has taken hold over recent years in areas such as vehicles and office space.

Similar to student housing, co-living spaces offer a number of quality amenities and services including gyms, concierge, cleaning services, laundry and so on, while still affording tenants city living. The cost of these services is usually included in the rent, which may be somewhat higher than standard house share rents. However, the additional cost incurred to pay for these services separately would even out the additional cost. Co-living would still have the advantage of hotel like quality assurance and convenience of combining facilities and services to one location.

Co-living is popular amongst millennials and in cities that attract a high volume of expats

The current demographic attracted to co-living consists largely of millennials (broadly, those born between 1980 – 2005), many of whom are already used to house sharing, facing housing stress, and increasingly becoming disillusioned with the idea of home ownership in the process. Co-living is also popular in cites that attract a high volume of temporary and longer term expatriate skilled labour force such as London, Singapore, New York and Hong Kong, which also tend to be cities with higher densities. These factors make Sydney the most likely candidate for co-living in Australia.

The attraction to co-living includes move in readiness, lease flexibility, price transparency and brand recognition, while avoiding the higher costs of hotels and setting up individually. This trend is likely to continue as millennials increasingly enter the workforce over the coming years, capitalising on global mobility and expecting it at some point in their careers.

Australian cities have lagged behind major global cities in introducing co-living

In Australia, the concept has lagged behind other markets, which is largely due to the persistent mindset of many domestic households who still aspire to own their own house on a quarter acre block of land. Higher home ownership rates in major Australian cities (62.3% in Sydney and 66.4% in Melbourne) compared to other global cities such as New York (32.0%) and London (48.2%), is also likely playing a role. Home ownership is falling (see chart) and attitudes are slowly shifting from suburban to urban lifestyles, but it still seems that the forces driving co-living in other parts of the world are far less pressing in Australian cities, particularly outside of Sydney. Until these dynamics change, the opportunity for co-living will likely concentrate on a niche market consisting of students, temporary and newly arrived workers.

Figure 1: Home Ownership vs. Renting in Sydney
Source: Australian Bureau of Statistics

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