The rental crunch in Australia has already led more renters to think about shared living, and that is generating apparent hot spots to investors. The greatest demand is concentrated around large labor centers, universities, and places with good transport access—while the best type of housing comes down to speed-to-market, layout, and local regulations.
Why shared living is growing
Shared living has also increased due to the reduced weekly cost that the renters pay and yet they are still near the work, study, and lifestyle precincts. This is precisely what co-living in Australia is most suited to: high cost, high demand localities where individuals desire convenience and cannot (or would not desire) renting or purchasing the entire property.
Investment wise, it is easy to see the appeal: with a high demand, individual room-by-room rentals will decrease vacancy risk compared to that caused by one household having to take (and use) the whole lease. It is also shifting to a sector where professional operators and large property groups have become more interested in the sector, which is an indicator that it is no longer under a niche framework.
City demand (and optimal fit) by city
The list of cities which continually present the best indicators of shared-living demand, as well as the housing types that tend to be the most appropriate with them are listed below.
Sydney: greatest demand, the greatest competition.
Sydney is commonly referred to as the key co-living Australia, and it has been reported that it forms the large majority of co-living activity in the country. It has also recorded a good amount of transaction activity in Sydney, with over 50 million co-living site sales reported being sold throughout 2024, suggesting continued investor interest.
The type of housing that would be appropriate in Sydney is:
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Adaptive reuse and purpose-built assets (when available) may fit well together since the location of land is costly, and demand is more inclined to favor well-planned, amenity-rich structures.
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When the plan of the house allows it to be secluded (good bedroom distance, adequate number of bathrooms, reasonable common spaces), it is possible to convert inner-suburb houses, although it is better to start small.
Melbourne: stable demand as renters are required to be flexible.
The rental conditions in Melbourne have enabled the development of shared living with tight vacancy conditions projected for 2025 that have increased the competition in rentals. The investor-centered commentary still emphasizes Melbourne as a city where co-living can be an appropriate option in the inner-suburban locations to students and professionals with the early career goal and less to spend every week.
Types of housing that are commonly applicable in Melbourne:
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Rooming house style accommodation (with own bathrooms where available) can be optimally suited to regular and consistent year-round tenant occupancy in established inner and middle-ring suburbs.
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Upgraded houses are also a good fit for Melbourne, when close to universities, hospitals and transport corridors, although the property must be designed in such a way that there are no bottlenecks in the property where everyone shares a single bathroom.
Brisbane: rapidity in the rental market and cost pressure.
It has been noted that Brisbane will face very tight rental conditions in 2025 and the commentary will be characterised by very low vacancy rates and intense competition on the available homes. Renters are less demanding when the vacancies are that tight, and they will be willing to make compromises (such as renting a room) so that they would get a place in a short time and be close to employment hubs.
The type of housing which initially fits Brisbane:
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Big family houses with good access can be good as a shared rental as they tend to have the room of more than one bedroom and good communal areas.
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In cases where the blocks permit such upgrades, the addition of additional complying bedrooms/bathrooms (as opposed to crowding people in) can be the renovation that safeguards the experience of the tenants and lowers churn.
Perth: smaller market, although good occupancy underlining.
With co-living supply smaller than Sydney or Melbourne, case-study style reporting indicates large occupancy and a lot of inquiry when it comes to well established shared-living operations. Such performance measures indicate actual demand, particularly when the premise is in a good location, has reasonable regulations and is in a clean and well-maintained set up.
The type of housing which is commonly fitting Perth:
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Strategically placed shared houses may serve as the de facto entry point since they are easier to purchase and experiment with prior to going large-scale at it.
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Repeatable, standardised layouts can tend to create an easy to maintain, and easy to manage portfolio that can be built by the long term investors.
Best-fit type of housing: What it means
One would like to ask the question "What is the best single type of property to live with?" but a more appropriate question is "What fits this city, this group of tenants and this block?"
This is all you need to match the type of housing to demand:
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Expensive, space-constrained locations (typically in Sydney): Prefer designs that make the most out of privacy and liveability (ensuite, acoustic separation, storage, comfortable shared kitchens) on a per-square-metre basis.
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Student + early-career professional pockets (usually Melbourne): Search on layouts that manage year round turnover easily (durable finishes, defined house rules, well-equipped technology such as Wi-Fi connections).
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Fast-tightening markets (usually Brisbane): This focus is based on speed and functionality—good rooms, sufficient bathrooms and the train/bus station should be nearby and do much of the hard work.
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New demand markets (usually Perth): Initially good fundamentals (location + management), then grow when you have established the local tenant profile.
Where modular building would assist
Provided the area permits it (zoning, approvals, site access), modular homes in Australia can be an effective approach to those investors interested in a more repeated and faster build process and a shorter delivery time than would otherwise be the case in a traditional build schedule. It may also facilitate standardisation of room sizes and common areas across a number of sites, which is handy when you are trying to establish a uniform "tenant experience" across a portfolio.
The point is not to make modular a shortcut; it still requires good design thinking in the communal form of living (privacy, sound control, durable finishes, and comfortable communal areas).
Rapid investor checklist (prior to selecting a city)
To ensure decisions remain on track, go through the following before purchasing or constructing:
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Tenant demand: Do you have close access to universities, hospitals, large employment centers, or large transportation centers? The latter tends to favor consistent demand of rooms.
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Rental pressure: Does the general rental market place such strain that people are actively seeking share options?
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Suitability of the property: Does its layout accommodate privacy and daily activities (bathrooms, kitchen capacity, access to a laundry, separation of noise)
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Reality of management: Shared living is a business concept—standards of cleaning, response time of maintenance, and house rules are of more concern than in regular rentals.
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Local compliance: The rooming and boarding regulations may differ according to council and state and therefore it is advisable to ensure that these are met beforehand (not after you have renovated).
Over to you
In case it is shared living that is the strategy, Sydney will likely become the strongest demand base, and Melbourne and Brisbane might provide great momentum (which often implies other tenant mixes), and Perth may provide encouraging occupancy indicators in the correct pockets.
What city do you think you are best interested in targeting—and does the objective involve a single high-performing house, or an identical portfolio of multi-properties replicated?
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