OLIVER FRANKEL. Sharing our space (Part 2) – implications for housing affordability

Dec 29, 2016

Sharing our space undoubtedly makes accommodation more affordable for those willing to share, albeit with some sacrifice in privacy. 

In my previous post, I gave a glimpse of the fast growing “sharing economy” and its manifestation in the mainly travel/holiday accommodation segment. This post explores the potential of the sharing concept to help ease housing affordability.

Significant cost savings

There is no doubt that sharing accommodation is more affordable than living alone, and not by a small margin.

The per person rental cost of 2 people sharing a 2-bedroom apartment is estimated to be at least a third cheaper than living alone in a 1-bedder in the same or a comparable location. This saving is enhanced after accounting for the sharing of “bills” (ie. All the other living costs).

For those sharing apartments of 3 or more bedrooms, the cost savings are even greater.

Flat sharing

Flat or house sharing has traditionally been most popular among young adults in the 18 to 35 age range – particularly students – before the family formation stage of their lives.

It is popular in Australia and in many parts of North America and Europe.

Although the primary attraction of flat sharing is its affordability, the social benefits are also significant. It provides an instant way of making new friends and acquaintances.


Even if your flat mates are likeable and reasonable people, their mere presence represents a compromise to your privacy and ability to live selfishly. The loss of privacy is a non-financial “cost” – not to be scoffed at.

Some measure of discretion and consideration, at least in shared spaces, is called for in any shared accommodation situation.

Living with strangers can also bring other challenges. Not all flat mates will necessarily turn out to be to your liking, even if they seem fine at the beginning. They may turn out to be antisocial, insensitive or simply unfriendly.

However, these various downsides don’t seem to have dented interest in flat sharing.

flatmates.com.au, which claims to be Australia’s no.1 share accommodation website, with a market share of 60%, say they make some 490,000 introductions per month.

Grey shoots of change

Even older people are turning to sharing to help ease their housing costs.

This can take the same form as flat sharing amongst young adults, where typically none of the sharers own the shared premises and they simply join forces as co-tenants. Alternatively, it can involve a live-in landlord with spare bedrooms taking in one or more lodgers.

Lodging comes in a variety of forms. For instance, a lodger may pay full rent and have no duties, or there may be a partial barter arrangement under which the lodger takes on some household chores in exchange for a reduced rent. The lodger might even live rent free in exchange for undertaking more significant house work and other tasks.

Take for instance the “odd-couple” story of Alice, a 100-year old Melbourne based spinster, who took in 28-year old Sean as her first ever roommate. Sean commits to 10 hours a week helping Alice around the house, but pays no rent.

Privacy and cultural taboos

If sharing accommodation is so much cheaper than living solo, why is it not more mainstream? What are the obstacles to this?

As adulthood progresses, our desire for privacy certainly increases – all other things being equal.

However, when all other things aren’t equal, some loss of privacy may well be an acceptable price to pay for cheaper accommodation.

Cultural taboos around sharing later in life may also represent a potential obstacle.

However, the growing success of businesses like Airbnb proves that more of us at advanced stages of adult life are not too fussed by these taboos.

The sharing economy is changing behaviors and new cultural traditions are evolving as collaboration becomes the new normal.

Sharing friendly design

Housing and apartment design may also be a limiting factor in sharing becoming more mainstream, and therefore present a potential area for innovation and reform.   Many innovative ideas around design were featured at the October/November 2016 Designing Affordability exhibition at Sydney University’s Tin Sheds Gallery.

Think for instance about how a typical 2-bedroom apartment could be designed in a more sharing amenable way, without significantly increasing floorplate or costs.

Creating two separate entrances for a 2-bedder might improve privacy for comings and goings. Slightly enlarged bedrooms and an ensuite bathroom for each bedroom could also make sharing more palatable.

The cost of these enhancements to people’s private space might be partly offset by reducing the size of the 2-bedder’s communal areas. Floor space bonuses might also be used to incentivise developers to make changes.

An alternative design approach, adopted at Carmel Place (a landmark micro-apartment development in New York), is to minimise private space in return for more extensive communal areas within the apartment building.

One could even imagine some of our ever-growing number of large suburban homes being re-designed to provide greater flexibility for sharing down the track, as the needs of the family change.


The sharing economy has well and truly arrived and is influencing every aspect of our lives, including accommodation.

There is scope for long-term accommodation sharing to become more mainstream and so make a meaningful contribution to housing affordability, not just for young singles.

Government can play an enabling role in making this happen quickly and without a significant hit to the public purse. That’s surely something to cheer in this budget constrained world.

Oliver Frankel is a former corporate finance and M&A lawyer, who has spent the second half of his career in finance, investment and management. Most recently, he has taken a strong interest in how to address the affordable housing crisis.

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