Homeowners’ Spare Rooms Worth $700 A Month In Today’s Rental Crisis

Thousands of Australian homeowners are renting out spare rooms amid the rising cost of living, anaemic wages growth and a national shortage of rental homes. A survey by consumer company Finder shows 9% of respondents – extrapolated to more than 600,000 householders — are renting out their spare rooms. They’re making an average of $667 per month or $167 per week by renting out the spare room.

According to the Australian Bureau of Statistics, 77% of households have at least one spare bedroom that they could rent out during today’s rental housing crisis. CoreLogic estimates there is currently a rental housing shortfall of 47,500 homes, making it difficult for many Australians to find a rental home amid weekly rents increase by 30% over the past three years as a result. Meanwhile, homeowners are grappling with large increases in loan repayments due to rapid-fire interest rate rises. The combination of these two problems is creating a strong market for spare-room renting, with apps such as flatmates.com.au and AirBnb facilitating connections.

Finder’s money expert Richard Whitten said: “For many Aussies, living with a roommate is better than the consequences of missed repayments. It’s also a good opportunity to create an extra revenue stream. You could be missing out on thousands of dollars by not making use of your extra room. If you do decide to go ahead with it, you’ll need landlord insurance to be covered. Home insurance doesn’t typically cover damage caused by tenants.”

The number of householders living in larger homes than they require is a structural problem in the Australian housing market that was raised by former Reserve Bank Governor Philip Lowe at a Senate hearing in May.

During the pandemic, many householders switched from smaller forms of accommodation in inner city areas, such as apartments, to larger suburban houses on the city outskirts or in the regions because they were allowed to work from home. The number of people renting share housing also fell as people sought their own space to make working from home more comfortable and to cope with long periods of lockdown.

Now, Dr Lowe says rising interest rates and rents will force people to “economise on housing”. “The way that this ends up fixing itself, unfortunately, is through higher housing prices and higher rents,” Dr Lowe said. “Because as rents go up people decide not to move out of home, or you don’t have that home office, you [get] a flatmate. That’s the price mechanism at work. We need more people on average to live in each dwelling, and prices do that,” he said.

Dr Lowe said strong population growth would exacerbate the housing shortage, and rents would continue to rise. This means demand for accommodation, including spare rooms, is likely to remain high. “We’re going to have 2 percent more people in the country this year, [but] the capital stock is not increasing by 2 percent,” he said.

Rents have risen by 10% in capital cities and 4.1% in the regions over the past 12 months.

Renting it out is the latest method used by homeowners to derive an income from their homes. An explosion in short-stay accommodation apps over the past decade has also seen many homeowners renting separate living quarters or studios at their homes to short-term holidaymakers or travelling executives. In addition, the Finder survey found that 5% of the population – or more than 300,000 people – are renting out a garage. Australian websites such as Parkhouse, Parking Made Easy and Space Out are enabling homeowners to rent parking spaces including their own driveways.

The Finder survey asked respondents about their side hustles to earn extra income amid today’s cost of living crisis brought about by the highest rate of inflation in three decades and rising interest rates. The survey found that 35% of Australians — or 7.1 million people – are earning additional income through a side hustle. ABS data shows a record number of Australians now have a second job. Popular side hustle jobs include dog walking, mystery shopping, tutoring, freelancing and ride-sharing. The favoured non-employed side hustles include recycling cans and bottles, earning an average of $46 a month, making and selling goods ($213 per month) and selling pre-owned goods ($897 per month).