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With rents higher than ever, are share houses on the up?
New research from CoreLogic has unearthed a surprising trend in Australia’s rental market. Despite median rents hitting a new record – $634 per week, a $48 increase compared to June 2023 – Aussie renters are seeking out homes with more bedrooms, not less.
Homes with five or more bedrooms have seen an 8.7 per cent rise in rent, indicating strong demand. In contrast, one-bedroom units and studios have seen a marked drop in demand, slowing from 16.8 per cent price growth in the year to April 2023 to just 7.1 per cent growth in the past 12 months.
At first glance, this might seem counterintuitive. Large homes are more expensive than small homes, so why are cash-poor Aussies seeking them out?
According to Eliza Owen, head of research at CoreLogic, it may indicate a rise in share houses and multigenerational households.
“The average rent for a bedroom is lower the higher the bedrooms are,” Owen explained.
For a one-bedroom unit, the national median rent is $541 per week – a hefty amount for one person to shoulder. However, the median rent for a four-bedroom apartment divided by four equals just $171 per week for each member of the household.
“At the time of the 2021 census, group households made up a relatively small portion of living arrangements, accounting for around 3.6 per cent of people in private dwellings. But with most rental leases in Australia being a relatively short 12 months, rising rent costs may prompt some renters to form share houses and seek out larger dwellings for a cheaper room rate,” said Owen.
Share houses may also be getting a boost due to easing COVID-19 restrictions.
“The Reserve Bank of Australia highlighted a trend of share houses breaking up and spreading out across the rental market through COVID, which may have driven popularity in smaller dwellings that offered fewer bedrooms and a home office through 2021,” Owen said.
The dwelling types to see the sharpest price rises since the start of the pandemic were those that met this bill: two-bedroom units and three-bedroom houses.
Looking ahead, Owen predicted that “cities where larger house rents are underperforming, such as Perth and Adelaide, may eventually see a similar shift due to higher demand for larger dwellings that can be occupied by shared households”.
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