Rental market trends update: a deep dive into the surging demand for shared housing

Demand for share housing has hit record levels according to data from Flatmates.com.au

This surge is a direct response to the escalating housing crisis, where both buying and renting have become prohibitively expensive, driving more people towards shared living arrangements.

2024 Rental market overview: no relief in sight

The start of 2024 has not brought much respite for renters.

According to PropTrack's data, vacancy rates are still near record lows, and median advertised weekly rents continue to climb.

Both house and unit rents have reached unprecedented heights, with some regions experiencing increases of over $150 a week in the past year.

Ms Eleanor Creagh, Senior Economist at PropTrack, said that when compared to pre-pandemic levels, the hike in median advertised weekly rents is even more stark, exceeding $250 a week in some markets.

The steepest increases have been observed in Perth, regional Western Australia, and Sydney, significantly impacting tenants' living conditions and choices.

Adapting to rising costs: the shift to shared accommodation

In light of these challenges, tenants are adapting.

Many are turning to shared accommodation as a way to alleviate affordability pressures amid the ongoing cost-of-living crisis and incredibly tight rental markets.

January 2024 set a new record at Flatmates.com.au, with 212,000 active members - a 6% increase from the previous year.

This peak is typically seen due to seasonal migratory trends, universities recommencing, and turnover/lease renewals, Ms Creagh said.

The recent surge in rental prices means tenants are now dedicating a larger portion of their income to rent, leading to an uptick in shared accommodation.

This trend is highlighted by a survey from Flatmates.com.au, where 48% of respondents share accommodation due to financial constraints, and 70% would prefer to live alone if financially viable.

The rental market's dual challenge: prices and availability

The rental market isn't just battling high prices; availability is another critical issue.

The competition for available rentals is fierce, with properties being rented out rapidly.

Ms Creagh noted that this challenge has led to an increase in average household sizes, though they still remain lower than pre-pandemic levels.

Interestingly, increased investor activity and changes in household dynamics have helped alleviate some of the pressure in tight rental markets.

However, the ongoing tightness in rental market conditions is likely to continue driving up rental prices, maintaining the popularity of shared accommodation.

With mortgage servicing costs rising, some homeowners are renting out spare rooms to offset the increased cost of living.

This trend is evident on Flatmates.com.au, with a significant 18.8% increase in new property listings since last year.

Despite these efforts, the demand for rentals still significantly outweighs the supply.

In many suburbs, the seeker-to-lister ratio is extremely high, reflecting the ongoing imbalance in the rental market.

These data highlight the continued challenges in Australia's rental markets, emphasizing the impact of cost-of-living pressures and underscoring the need for more affordable and available rentals.

Future outlook

The ongoing weakness in dwelling investment suggests these pressures won’t ease significantly soon.

With limited new projects and robust population growth, the housing shortage is set to continue.

The federal government has recognized the need for more housing, setting a target of 1.2 million new homes by 2029.

However, current trends suggest it's unlikely we'll meet this target in the proposed timeframe.

As we move through 2024, the limited supply of new dwellings, strong population growth, and shifts in preferences due to the pandemic will continue to put pressure on rental markets.

This ensures that shared accommodation remains a popular and necessary option for many Australians.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.