Australia’s chronic housing shortage continues to shape the property market, with no immediate resolution in sight. This issue affects both major capital cities and regional areas, spurring various government initiatives to address affordability and increase supply. These measures include reduced stamp duty, zero-deposit schemes, and government-shared equity programs. These measures include reduced stamp duty, zero-deposit schemes, and government-shared equity programs.
Rooming houses are increasingly viewed by property investors as a practical and profitable solution to Australia’s housing crisis. These purpose-built properties provide affordable, long-term housing while delivering significantly higher yields than traditional residential properties. For investors, this translates into the potential to generate passive income that meets – or exceeds – the average Australian salary, enabling greater financial freedom.
Investing in a rooming house may be the wise choice of the time, especially for those seeking higher rental returns with a lower capital outlay, particularly after 13 consecutive interest rate rises. However, not all states and local government areas allow for or have legislation in place for rooming accommodation.
In Brisbane, state government legislation supports rooming house developments, and the financial potential is striking. Well-designed rooming houses that maximise land use can add between $104,000 and $130,000 in gross annual income to an investor’s portfolio. With weekly rents ranging from $420 to $520 per room, it’s clear why savvy investors are drawn to this high-yield cashflow strategy.
The case for rooming houses goes beyond income potential. With Australia’s population set to reach record highs over the next decade, housing demand is projected to outpace supply. Rooming houses address this gap. Additionally, the high depreciation associated with newly constructed rooming accommodation provides another compelling advantage making a rooming house an attractive option for those looking to maximise their tax benefits.