The rise and rise of co-living

Co-living is emerging as a key housing trend in Australia, following its rapid rise in Europe. It offers flexible, community-focused living with shared amenities. This makes it ideal for young professionals, digital nomads and creatives. Australia has just over 2,000 co-living beds (compared to 56,000 in Europe). But rising rental costs, urban migration, and increased investor interest suggests there's significant growth potential. Government policy support in forward-thinking states like NSW and SA is helping shape the sector. But it needs a consistent national approach. Affordability pressures continue to mount and demand for social connection grows. So co-living presents an innovative solution as a small but valuable part of the solution.

Co-living is a growing housing trend. Have gained rapid traction in Europe, it is starting to do the same here. In this article we explore what co-living is, and how it's defined by planners. How large the sector is today and is likely to be, and the factors underpinning its rise.

What is it?

Co-living - short for communal living, is defined as:

“…a new form of communal housing, where individual residents rent (on flexible lease terms) private rooms or studios within a wider unit or building, which also offers shared spaces and a level of serviced living”¹

It's designed to foster collaboration, convenience, and affordability. Making it particularly popular among young professionals, digital nomads, and creatives. Co-living spaces typically offer fully furnished accommodations, flexible lease terms, and communal areas. This encourages social interaction and networking.

Co-living models are highly variable because they're shaped by location, design, and the needs of its residents. Making it hard to explicitly define and encapsulate in a single classification. Some focus on luxury amenities and private suites. Others emphasise affordability and shared experiences. Many incorporate themes such as sustainability, entrepreneurship, or wellness. Creating a distinct atmosphere and sense of community that sets them apart from traditional housing options.

How is it defined by planners?

NSW is the only State which has adopted a co-living definition. But South Australia is in the process of doing so (Table 1). None of the other four states or territories have explicit definitions or policies regarding co-living. And as such it's dealt with by broader housing or shared accommodation regulations. A consistent and definitive policy approach between the states and territories is needed. As it would provide more clarity for developers and investors when they are looking to support the sector.

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Table 1: Co-living definitions, NSW & SA

How big is co-living?

In Europe – massive. The UK alone has around 9,000 operational units and 5,500 in the pipeline². Across Europe there are approximately 56,000 operational co-living beds with a pipeline for a further 75,000³.  

By comparison, Australia is only at the start of the co-living wave. It has a little over 2,000 operational beds, with the majority (90%) of which are in Sydney⁴. Given that around a third of Aussie households rent – over 3 million households – and the context of the meteoric rise of European co-living, it suggests significant growth capacity here. Foreign investors, including global institutional investors like PGIM and AXA, are sinking greater amounts of capital into the sector.

What has spurred its delivery?

Co-living in Europe and now Australia is rapidly growing as an innovative housing solution. It is being driven by economic, social, and lifestyle changes. The rising cost of living, urban migration, and loneliness issues have underpinned an increased demand for flexible and community-focused living arrangements. Co-living provides for this demand. Table 2 summarises the key factors contributing to this trend. Highlighting how affordability, government policies, and evolving lifestyle preferences are shaping the co-living space.

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Table 2: The driving factors behind co-living growth

Grow-living: Co-living is set for major growth

Co-living is on the cusp of major growth in Australia. But given its niche offer it will always remain a small part of the housing sector. However, it is nonetheless a critical part of the housing continuum. As it broadens the product mix by offering reasonably affordable rents, and the capability to be built at speed. Which is also backed by international capital. Though, the lack of a consistent nationwide definition will now slow its rise. Strap yourself in for the co-living boom.

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