Co-living, the practice of two professional couples or a multigenerational family living together in a leased home or apartment, has gained popularity in recent years.  Co-living, also known as co-habitation, is a trend that has become increasingly popular for several reasons, including changing lifestyle choices, housing shortages, and cost concerns.

Co-living presents our landlords with both possibilities and difficulties, as they must strike a balance between maintaining their properties and maximising rent.

Let’s now analyse the elements that have contributed to the growth of co-living, look at it from the perspective of a landlord, and talk about ways to make co-living more desirable to this expanding group of people.

Western Australia Real Estate Trends

In recent years, Western Australia (WA), and particularly Perth, has seen a significant transformation in the real estate market, characterised by rising demand, rising prices, and increased innovation:

Tight supply and a housing boom

• Perth’s median home price increased by over 24% between 2023 and 2024, from A$600k to A$745k, while median unit prices increased by about 21% to A$500k.
• Through 2025, CoreLogic and REIWA anticipate further price increases of 5% to 10%.
• Even with the completion of around 19,000 homes in 2023–2024—the most in seven years—WA is expected to have a shortage of about 25,000 dwellings by 2027.
• Perth has extremely low vacancy rates (0.4–1.9%), which contribute to rental inflation (~8–14% annually) and high median rentals of around $650 per week.

Drivers behind the surge

• Population growth: Due to interstate movement and resource-driven foreign arrivals, WA’s population has increased by more than 2–3% every year, adding more than 119,000 persons since 2023.
• Economic resilience: It is supported by a robust employment market, which in turn enhances affordability and mortgage capacity, driven by key sectors such as mining, resources, healthcare, and technology.
• The inflow of investors: Demand has increased due to significant investment activity from eastern states and abroad, which accounts for up to 60% of transactions.
• Cost-effective advantage: Perth remains reasonably accessible compared to Sydney and Melbourne, attracting first-time buyers and investors to Western Australia.
• Policy changes: Even though WA remains the most affordable state in the country (40.8% of income compared to 48% nationwide), affordability has increased thanks to the 2025 RBA rate decreases (February and May) and programs like the First Home Owner New Home Grant (A$10,000).

The Growing Popularity of Co-Living

Affordability Issues:

• The rising cost of living in many cities is a significant factor contributing to the increasing popularity of co-living arrangements.  
• People now find it challenging to afford their own homes or flats due to skyrocketing rents and property rates.  
• By sharing costs such as rent, electricity, and even food, co-living offers a cost-effective alternative that can significantly reduce monthly expenses.

Home Shortages:

• There are not enough reasonably priced home alternatives available in the Tweed Heads and Gold Coast areas.  
• Co-living has become a viable option as a result of individuals seeking innovative solutions to address this shortage.  
• It makes housing more accessible to a broader range of people in areas where rental housing is scarce.

Changing Lifestyles:

• As people’s lifestyles evolve, they increasingly prioritise relationships and experiences over material possessions.
• These shifting priorities are reflected in the feeling of community and shared experiences that co-living provides.
• The social component of co-living is preferred by many people, especially after feeling isolated during the COVID-19 pandemic.

The Landlord Perspective

Serving the co-living community can be profitable for landlords, but it also presents special challenges.

Rent Maximisation:

• By setting up their homes to accommodate multiple occupants, landlords can profit from the co-living movement.  
• This might entail furnishing rooms with communal spaces or partitioning bigger apartments.  
• Landlords can raise their total rental income by doing this.

Maintenance and Wear and Tear:

• The increased wear and tear on the property is one issue that landlords deal with when tenants live together.  
• Shared facilities, appliances, and utilities are used more when there are more residents.  
• Landlords can mitigate this by ensuring their property manager conducts routine inspections and by considering a higher bond amount (subject to legal constraints, of course) to cover potential damages.

Changes to the lease:

• Requests for occupant changes are common in this type of tenancy.
• For example, when a tenant leaves, they may be asked to remove their name from the lease and then request permission to bring in a new housemate once someone has been selected.  
• Before granting permission to change the lease with a new tenant, the property manager should carefully review the rental history of each potential new inhabitant to prevent possible issues.

Pets:

• Since many people who choose co-living facilities also own pets, landlords looking to attract this group should consider creating pet-friendly areas, such as ensuring the fence is safe.
• Landlords may increase their rental pool and foster a more welcoming and cosy environment in their buildings by allowing pets.
• Establishing explicit pet policies and procedures is crucial for finding a balance between accommodating pet owners and ensuring the comfort and security of every inhabitant.

Finance Options for Modular & Co-Living in WA

1. In Western Australia (WA), co-living and modular complexes are gaining popularity as creative housing options amid rising urban congestion and persistent home affordability issues.  

2. In addition to meeting the increasing need for affordable, adaptable, and sustainable housing, these models also offer exceptional financial opportunities, as well as challenges.  

3. For developers, investors, and politicians navigating this arena, it is essential to comprehend the range of funding alternatives available, from conventional loans to joint ventures and government incentives.

Traditional vs. Alternative Lending

Traditional Lending

Traditional bank financing remains the go-to for many real estate projects, but it’s not always a perfect fit for co-living or modular housing. Banks often view modular construction as “non-traditional” and co-living models as higher risk due to limited operating histories and unconventional rental structures.

Pros:

• Lower interest rates (3%–6%)
• Familiar loan structures (construction-to-permanent loans)
• Long-standing relationships and regulatory protection

Cons:

• Stringent approval processes
• Conservative LVRs (Loan-to-Value Ratios)
• Hesitancy toward modular techniques or emerging housing models

Alternative Lending

Non-bank lenders, private funds, and specialist construction financiers offer greater flexibility and are increasingly stepping in to fill the gap.

Examples:

• Peer-to-peer (P2P) platforms
• Specialist modular construction lenders
• Private equity-backed lenders

Pros:

• Faster approval timelines
• Higher LVRs or LTVs (up to 75–85%)
• Acceptance of co-living operating models

Cons:

• Higher interest rates (6%–12%)
• Shorter loan durations
• Less regulatory oversight

Developer Capital, Pre-Sales & Joint Venture (JV) Structures

1. Capital for Developers

Internal capital is essential for co-living and modular initiatives in their early stages. Developers frequently have to pay for:

• Studies of feasibility
• Purchasing land
• Early planning and design

Bootstrapped capital demonstrates dedication and attracts other lenders or investors.

2. Before the sale

Banks still require pre-sales to reduce credit risk, even though modular complexes have quicker building schedules. However, typical pre-sales are meaningless since co-living arrangements sometimes entail leasing rather than selling units. Solutions:

• Long-term corporate leases or pre-leasing agreements
• Collaborations with operators of build-to-rent (BTR)

3. Structures of Joint Ventures (JVs)

Developers may share the risk and gain with the use of JV arrangements. A normal JV might include the following:

• Landowner JV: The landowner provides land, and the developer develops
• Equity JV: When two people invest money together, they split the earnings.
• Operator JV: Perfect for cohabitation, one party develops while the other oversees operations.

Bargoti frequently structures win-win projects by utilising investor-developer partnerships and landowner-developer joint ventures.

Grants & Incentives (State and Federal)

1. Federal Initiatives

• National Housing Accord: Financial incentives for 10,000 inexpensive homes, particularly those that are in line with modular and co-living
• CEFC, or Clean Energy Finance Corporation: Grants and loans for environmentally friendly construction methods (including prefab)
• Build-to-Rent Tax Benefits: 50% Off Withholding Tax on Managed Investment Trusts

2. Assistance from the State Government (WA)

• WA Modular Construction Fund: Provides expedited approvals or subsidies
• Keystart Partnerships offers low-deposit loans for end-users in modular communities.
• Potential collaboration on affordable housing with private developers.

3. Significant Possibility

Under urban infill initiatives, co-living projects that align with housing for children, students, or essential workers may be eligible for planning and funding assistance.

Conclusion

The co-living and modular housing movement in WA stands at a tipping point. With sustained demand, technological innovations, and proper policy support, the model is set to become a cornerstone of Perth’s housing future. However, addressing challenges related to community acceptance, financing, and regulation is crucial.

Through strategic planning, public-private collaboration, and community-first design, players like Bargoti Real Estate can shape this emerging segment into a scalable, sustainable, and resilient solution for the next generation of Western Australians.

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