Addressing the SEQ Rental Crisis: The Investment Potential of Co-Living

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South East Queensland is currently facing a significant rental crisis characterized by a shortage of available properties and escalating rental prices. To address this issue, innovative solutions such as allocating a portion of new developments for investment properties and embracing the co-living concept are gaining attention. These approaches aim to balance supply and demand, enhance affordability, and cater to the evolving demographics of renters in the region.​

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Rental Demand & Crisis in SEQ

The rental market in SEQ is experiencing unprecedented pressure. According to property data analytics firm CoreLogic, median weekly rents across various dwelling types in Greater Brisbane have surged by 40% in the last five years, and 55% across the Gold Coast. This increase is compounded by a tightening rental market, with vacancy rates remaining low. As of February 2025, Brisbane and the Sunshine Coast reported vacancy rates of 1%, SQM Research shows, while the Gold Coast was slightly higher at 1.3%. Such low vacancy rates indicate a high demand for rental properties, further exacerbating the affordability crisis.​

Such low vacancy rates indicate an overwhelming demand for rental properties in SEQ. However, the imbalance between supply and demand is creating an untenable situation. With fewer rental properties available, competition for housing is fierce, driving prices up and leaving many renters struggling to find affordable options. The rising cost of rent is a significant challenge for many, particularly in an environment where wages have not kept pace with housing costs. For instance, to afford a median-priced rental in SEQ, many individuals would need to earn far more than the average wage, creating a huge gap between income and housing affordability.

In response to these challenges, it's crucial to explore new ways of increasing rental supply and addressing affordability. One such solution is redirecting new developments to accommodate more investment properties.

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Investment in New Developments & Co-Living as a Solution

An often-overlooked solution to SEQ's rental crisis is the allocation of a portion of new property developments for investment properties. While some critics argue that investment properties contribute to housing shortages, research suggests the opposite. By directing a portion of newly built properties toward investors, more rental options are made available to meet the growing demand. Investors, in turn, provide much-needed supply to the rental market, especially in high-demand areas.

Ultimately, Australia needs investors—they are essential for creating rental housing stock. However, decade-high interest rates and rising taxes caused many investors to retreat from the property market. Despite these challenges, investor activity is starting to pick up again. The 48,876 investor mortgages granted in the December quarter was an increase of 22% compared to the same period the year prior.

Traditionally, investors have followed the well-worn path of purchasing a property and leasing it out to long-term tenants or using it as a holiday rental. However, newer, more innovative investment strategies have emerged that allow investors to see stronger returns than the traditional approach. One such alternative is co-living—a growing housing model that addresses key issues such as affordability, housing supply, and the need for community-oriented living in the face of a housing crisis.

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The Role of Co-Living

Co-living has been a popular housing model in the US and the UK for decades, but hasn’t truly been adopted in Australia until recently. Gallery very much pioneered co-living in South East Queensland, developing its first co-living home back in 2020. 

Co-living is a modern housing solution that combines private sleeping quarters, including an ensuite, with shared common areas. The co-living solution benefits both the tenant and homeowner in equal measure. Gallery’s co-living homes create a mix of both a sense of togetherness and social interaction but also privacy, with pin pad entry bedrooms, a lockable pantry, and separate leases, so each single tenant is in control of their own housing future.

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Co-Living for the tenant

One of the key benefits of co-living for a tenant is affordability. CoreLogic data suggests, the median rent across Greater Brisbane has surged to $667 per week, marking an increase of over 40% in the last five years (as of February 2025). In contrast, a secure room in a co-living house is available for just $320 per week—less than half the cost. This makes co-living an attractive option for tenants seeking more budget-friendly housing. 

Additionally, shared costs for utilities, internet, and other bills further lower living expenses, offering a truly cost-effective solution. Co-living homes also come fully furnished, another added benefit to co-living for those looking for a lock-up and leave housing option. 

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Co-Living for the investor

Surging property prices and interest rates have seen investors' yields deteriorate when it comes to the traditional way of investing in property. However with co-living, investors are getting more money because they are, essentially, getting three tenants instead of getting one.

Another important factor with the co-living housing solution is how it is zoned. Where the traditional ‘investor grade stock’ would see investment apartments only realistically be sold to an investor, Gallery’s co-living homes aren’t as limited when it comes to their resale. The houses are zoned General Residential, so when it does come time to sell, they present as a three-bedroom, four-bathroom home with a media room, which also opens up the opportunity to sell to a family buyer, which 71% of households in Queensland.

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A Growing Solution

The increasing demand from both tenants and landlords for co-living arrangements is rapidly gaining traction across Australia, driven by the growing desire among young renters for more community-oriented living environments. Australians in their late 20s and early 30s are increasingly seeking flexible, affordable housing options that foster social interaction and a sense of belonging. With limited opportunities to move out of the family home and the widening gap between wages and housing costs, co-living presents an appealing alternative.

While specific data on co-living is still emerging, figures from the Australian Bureau of Statistics reveal that the number of group households is projected to grow significantly, from 405,000 in 2021 to between 506,000 and 608,000 by 2046. The number of individuals in group households is expected to rise to between 1.2 and 1.4 million, reflecting an increase of 28% to 53%. Notably, the 2021 ABS Census data, released last year, revealed that nearly half of all group household members were in their 20s, underscoring the popularity of shared living among younger Australians.

The strong demand for co-living spaces is also evident in the market’s financial performance. In 2024, the aparthotel, serviced apartment, and co-living sectors generated $2.54 billion, with projections indicating that this figure will grow to $5.8 billion by 2030, reflecting a compound annual growth rate of 14.8%. This growth, according to research from Grandview Research, demonstrates that co-living is more than just a passing trend—it’s an evolving housing model that is set to continue expanding.

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The Gallery Guarantee

Ever since Gallery’s first co-living build in 2020, we have continually evolved the product, in both design and efficiency of build. We have an industry-leading set of guarantees for our investor. We guarantee we will start the build on site within four weeks of land settlement, and the home will be built in 18 weeks. In 2024, 97% of all of the homes Gallery developed were delivered in this timeframe. Those that weren’t were well compensated until the build was complete. The final guarantee is that Gallery pays the difference in rent if the home is not tenanted within six weeks of handover. We currently have over 400 co-living properties under management and 1,200 tenants across our property management portfolio through South East Queensland.