The Rise of Rooming Houses in Australia’s Biggest Cities

Australia’s strained rental market—fuelled by soaring costs, low vacancies, and shifting demographics—has given rise to an increasingly popular housing model: purpose-built rooming houses, also known as co-living or share-accommodation properties.

Melbourne: Policy Drives Purpose-Built Innovation
Victoria's flexible rooming house regulations allow up to nine rooms and 12 residents per property—a sharp contrast to stricter caps elsewhere, like Queensland’s five-room limit. This flexibility has spurred investors and developers to transform entire homes into modern shared living spaces designed with private en suites and communal kitchens.

These purpose-built rooming houses meet demand from professionals on short-term contracts, students, and migrants seeking affordable, flexible accommodation close to the city.

However, regulatory quirks persist: a 2022 VCAT ruling in Victoria forced kitchens in individual units to be removed in some councils, causing legal and design uncertainty for developers.

Sydney: Co-Living Scales Rapidly

Sydney leads the nation in co-living conversions, accounting for around 90% of Australia’s co-living developments. Investors are repurposing hotels, apartment blocks, and townhouses into professionally managed co-living spaces. One striking example: a Potts Point art‑deco hotel was bought for $31.5M to become a 70‑unit co-living residence.

These properties offer private rooms with shared lounges, cleaning, utilities, and Wi‑Fi at a single monthly fee—ideal for renters seeking convenience and community. With room rents in Sydney frequently reaching $550–870 PW, and vacancy ratios as steep as 80:1 in popular suburbs, share‑housing offers a more accessible pathway amid an unaffordable general rental market.

However, critics warn that poor quality and lack of regulation—especially in investor-driven conversions—can compromise tenant safety and rights.

Brisbane: Micro-Studios and Emerging Boom

Brisbane has seen a boom in subdivided homes and micro-apartment conversions. One project in Deagon split a house into five studio units, each renting for $400+ per week with private kitchenettes and ensuites.

Investors are attracted by high rental yields and lower vacancies, often treating rooming house financing as commercial rather than residential. Brisbane rooming houses typically cater to students, FIFO workers, low-income earners, and young professionals.

High-end developments, such as Ben Cutting’s in Morningside, aim to deliver studio units at around $550 per week, inclusive of all utilities. These modern-built rooming houses offer privacy, affordability, and convenience, balancing investor returns with renter well‑being.

Opportunities & Challenges
Opportunities:
– Provides affordable housing to key workers, students, and low-income renters.
– Modern builds deliver privacy and community—often with en-suites and smart amenities.
– Investors gain from high yields and lower vacancy risk.

Challenges:
– Regulatory inconsistency, especially across local councils, complicates designs and compliance
– Risks of poor quality, overcrowding, or tenant exploitation in low-grade conversions
– Short leases might leave tenants in precarious housing situations.

Rooming houses have moved beyond stop-gap solutions to a core part of Australia’s rental ecosystem. From Melbourne’s high-yield purpose-built developments to Sydney’s fast-scaling co-living conversions and Brisbane’s micro-studios, this model addresses real housing stress. But for it to work long-term, clearer regulations, quality standards, and stronger tenant protections are essential.

Looking ahead, purpose-built rooming houses—when well-regulated and thoughtfully designed—can offer a socially responsible and financially sustainable response to Australia’s rental crisis.

(Sources: artizenhomes.com.au, 9commercialrealestate.com.au, 9brisbaneroominghouses.com.au, the guardian, abc.net.)