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Rent Out Property

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

The demand for share houses is back to pre-pandemic levels as vacancy rates sit at historic lows, according to data from a flatmates listing service owned by property website REA Group.

But the data also shows that in many key suburbs, moving in with a flatmate is not a cheap alternative to living alone. And there are concerns renters will keep rising this year.

Melody Kwan and Leo Ng’s experience highlights the difficulty of this trend.

When the pandemic hit in early 2020, the young couple in their 20s were living in a two-bedroom apartment they shared with a flatmate.

In 2021, Melody and Leo moved into their own one-bedroom apartment across town in Sydney which cost $480 a week.

But after a 12-month lease, the rent on their Macquarie Park apartment was hiked in mid-2022 by 25 per cent, to $600.

“I’m a full-time student. I only work a part-time job,” Melody says.

“I kept telling everyone this is crazy.”

Financially, their only choice was to move back into a share house, which has historically been seen as a cheaper option due to the cost of rent and overheads such as internet and power bills being shared.

However, in Melody and Leo’s new share house, they are now paying the same amount together for a room as initially did for a whole one-bedroom apartment — $480 a week.

They have also had to move further away from Melody’s university.

a young couple staring at a camera
Melody Kwan and Leo Ng are backing up sharing a fridge, laundry facilities and other communal areas with a flatmate.(ABC News: Daniel Irvine)

“We have no choice,” Leo said.

“Everywhere is getting expensive.”

Ironically, their new flatmate is the same one they left in 2021.

Luckily, he is a good friend that the couple has known since they moved here from Hong Kong about five years ago, but that still means they’re back to communal living, which includes sharing a fridge and laundry spaces.

“It’s hard for bill counting,” Leo said.

Why did people leave share houses during the pandemic?

A graph from Australia’s central bank shows the shift in household make-up 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.

a graph showing people left sharehouses and moved in with partners or parents

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 over 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 shared 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.