Our neighbours recently sold their home, and at first, I couldn’t understand why the buyer paid what they did. That was until I saw their plans and got a glimpse into the future of Australian housing.
Upon looking at the plans I realised that the owners intended to fit 12 separate income-producing units onto what had previously been a single suburban homesite.
They’ve subdivided a 600 sq m block into two 300 sq m lots and are building what’s known as co-living accommodation; effectively six self-contained one-bedroom units per dwelling.
Each unit is simple yet functional: a bedroom, living space and bathroom. At around $400 per week inclusive of bills (or roughly $350 net), this equates to approximately $4,200 per week across 12 units when the site is fully occupied.
The numbers are certainly compelling. Even using conservative assumptions, the project appears capable of generating returns that would be difficult to achieve with a traditional residential investment.
But the returns aren’t the most important part of this story. The real question is why a project like this makes economic sense in the first place.
Many might ask why someone would choose to rent one of these units instead of a traditional apartment. If you ask me, I think the better question is the reverse: why would a developer build traditional apartments at all?
Construction costs remain high. Approval and construction processes can be lengthy. And large-scale developments often require significant capital, carry substantial risk and can take years to complete.
By comparison, co-living accommodation can deliver multiple income-producing dwellings on a standard suburban block at a lower cost, in a fraction of the time.
This is where the bigger shift becomes clear.
For decades, density in Australia has meant high-rise living. But what’s emerging now is a more subtle and scalable version: ‘gentle density’. Instead of building up, we’re building smarter; smaller blocks, which in itself is a more efficient use of land and more flexible living arrangements within established suburbs.
This shift has been happening gradually for years. Block sizes have fallen from 1,000 sq m to 800 sq m, then 600 sq m, and now 400 sq m is increasingly common. The direction is clear, and it’s not unreasonable to see 200 sq m blocks become the norm in middle-ring suburbs over time.
The challenge facing many families today is simple. They still want good schools, a backyard, a short commute and access to amenities. The problem is that the traditional version of that dream is becoming increasingly unaffordable.
The solution isn’t bigger homes. It’s a better use of space.
What we’ll see is more standard homes repurposed; four-bedroom houses becoming dual-income dwellings or eventually transitioning into formats like co-living.
Personally, I wouldn’t rush out and replicate my neighbour’s project tomorrow.
The reason? Development carries risk. Construction costs remain elevated. Most importantly, I generally prefer assets that are closer to cash-flow neutral, allowing growth to do the heavy lifting over time.
But what I find compelling is the future direction of housing.
I would much rather own well-located land today and retain the flexibility to repurpose it in the future.
I’d suggest buying the right property, holding it through multiple cycles, and in 10 or 20 years the highest and best use of that land may look very different from how it looks today
That’s why I believe the biggest opportunity sits in acquiring land now in locations most likely to benefit from this shift. Properties close to major employment hubs, public transport, hospitals, universities, schools and shopping centres are likely to become increasingly valuable as Australia searches for ways to accommodate more people within existing suburbs.
To me, the opportunity isn’t necessarily buying co-living projects today. It’s owning the land that may one day support them.
Ultimately, this is how I see the great Australian dream evolving.
It will still be about home ownership. It will still be about community and living close to the people, places and opportunities that matter most.
But it may no longer mean a single family occupying a large block of land. Instead, it may become more efficient, more adaptable and more reflective of how Australians live.
For decades, the Australian dream was measured in square metres.
Over the next few decades, it will be measured by something different: proximity, convenience and affordability – delivered through the smarter use of land.
You heard it here first, gentle density is the next chapter our great Australian Dream.
