City Communities

The second of the housing solutions, companion to Memo 7, Rural Communities. Its argument is simple: the buildings are already built. Australia's cities hold floor after floor of empty offices and shop-tops, and four groups of people who cannot afford to live near their work, their study and their play. For a fixed term, the two can be matched.

1. The predicament in the cities

Across six inner suburbs of Sydney, share rooms advertise at an average of more than 2.5 occupants a room, and two-bedroom flats commonly hold five to fourteen people. Bathrooms and living rooms are converted into bedrooms, and smoke detectors are removed to make the space; an international student died in an apartment fire at Bankstown in 2012. In Melbourne, a two-bedroom flat offered at $150 a bed to eight people returns about $1,200 a week — roughly triple the median unit rent. None of it can be made lawful: a landlord cannot obtain a permit to convert a property to shared accommodation, because no planning definition covers the arrangement, so there is no lawful version for a responsible operator to run.

The demand behind it comes from four groups shut out of the same places for different reasons. One purpose-built bed exists for every fifteen students enrolled at an Australian university, rents in that accommodation now run to $550 to $850 a week in Sydney, and Western Australia has fewer beds per student than the other capitals. Young workers on shift and apprentice wages need to be near the work and cannot pay what being near it costs; they are also the loneliest age group in the country.

Artists earn a median of $5,000 a year from creative work in Greater Sydney and spend around 80 per cent of it renting workspace — a second rent on top of housing. And older renters are the fastest growing group within the homeless population, older women fastest of all: the number of elderly renters in rental stress despite rent assistance has more than doubled since 2013, and the land lease communities that serve this group, set out in Memo 7, are rural by nature — an older renter who needs to stay near a hospital, family or public transport has no city equivalent.

The inner cities show the end state. The suburbs made desirable by the artists and young people who lived in them have gentrified to the point where neither can now afford to live there — the city keeps the value they created and loses the people who created it.

2. The solution: the city community

Research prepared for the Property Council identified 86 Melbourne office buildings that could convert to more than 10,000 homes. They are the older, lower-grade buildings tenants have left and will not return to. That is one city.

The proposal is to let people live in them, for a fixed term, in the arrangement purpose-built student accommodation already uses: a private lockable room, with living space, kitchens, bathrooms, laundries and work space shared on each floor, under one operator and one set of house rules. The resident rents the room and holds an occupancy agreement over it. There is nothing to buy, no mortgage, and no whole dwelling to fill with strangers to make the rent. At the end of the term the fitout comes out and the building reverts to commercial use — and that is the part that makes an owner willing to offer a building at all. A permanent conversion strands the commercial use and asks for a decision most owners will not make; a fixed term asks only for income from space that is earning nothing.

This too is proven ground. Melbourne's Postcode 3000 program converted vacant upper floors of central buildings through the 1990s and is credited with restarting residential life in the city's centre. Renew Newcastle moved about 130 projects into 60 empty buildings over four years on a thirty-day rolling licence, with the operator carrying the insurance and the licence templates later published for anyone to use — it placed creative work rather than residents, and what it establishes is that owners accept the arrangement.

Student accommodation and commercial co-living already operate the physical model in every capital. Permanent supportive housing has run it with support attached since 2010. And the room above the shop is the oldest Australian version of all: in Newtown in 1892, 413 shop-residences were recorded against 20 buildings serving solely as shops.

The benefits fall to the resident, the owner and the city at once:

• A low cost of living. A private room with shared facilities costs less than any self-contained dwelling in the same location, because the private space is smaller and everything else is shared. Cheap city housing currently means overcrowding; this is the low cost without it, and it comes with a community attached instead of isolation.
• The buildings exist. 15.9 per cent of Australia's office space stood empty in January 2026 — 19.0 per cent in central Melbourne, 16.9 in Perth. The emptying stock is pre-1990, and its narrow floors are the convertible kind: a room needs a window, and the old floors are shallow enough for every room to reach one. Above the suburban shop, the ground floor is trading while the floor upstairs sits empty.
• Three costs never arise. Serviced land ($126,811 a lot in Victoria, $170,899 in New South Wales), land release (an average 4.2 years to gazette a Victorian growth precinct), and structure — the building is standing. Conversion costs are not consistently reported in Australia and this memo does not estimate them; cost per room is the first thing the trials at section 5 must measure.
• Speed. A fitout into an existing building against 11.5 months from approval to completion for a detached house nationally, and 15.45 months in Western Australia. Factory-built accommodation is already supplied to the resources industry from about $1,800 a square metre in five to seven months, so the manufacturing capacity exists.
• One rent, not two. A building that holds both a room and a workshop removes the second rent that consumes an artist's income — and returns work space to a city that has lost 28 per cent of its creative spaces.
• Near everything. Rooms within reach of the campus, the hospital shift, the family member and the train line — the proximity every one of the four groups is currently paying for in overcrowding.
• An owner can say yes. Melbourne B-grade space advertised at $614 a square metre is effectively paid at $307 — the owner of a half-empty building is already giving back half the rent. A fixed-term community pays income on space earning nothing, and the building's commercial valuation survives the term.
• Connection. A third of Australians report feeling lonely some or all of the time, and 18 to 24 year olds — the cohort priced out of the city — are the most affected. Shared living is associated with reduced isolation, strongest where residents run the shared spaces themselves. The claim is an association, not a treatment effect, and the trials must measure it.

Every room created in an existing building is housing that consumed no serviced land, no builder's solvency and no build time — and a lawful, inspected roof for people the law currently leaves in a subdivided flat with the smoke detectors taken down.

3. The proposal, in detail

The building. An older, lower-grade office with floors narrow enough for every room to reach a window; the empty storey above a trading shop — shop top housing is already a defined term in the New South Wales standard planning instrument, but only in its self-contained form, which is what makes small buildings uneconomic to convert. A hotel or motel needs the least change of all, because it is already classified as a building people sleep in.

The arrangement. Private rooms, with living space, kitchens, bathrooms, laundries and work space shared on each floor, under one operator and one set of house rules. The shared living room is what makes it a community rather than a rooming house, and it is named in the standards so it cannot be designed out.

No lot is created, no title is subdivided, the building is not strata-titled and the rooms are not sold; the building stays in one ownership. The building code classifies rooms let to unrelated people as Class 3 and requires natural light to the bedrooms rather than to every room, so communal areas without a window are not the obstacle they would be in an apartment building.

The term. The fixed term with reversion is the proposal; a permanent conversion is a variant available where an owner wants one. The term changes the planning decision and the capital required, but not the fire requirements, because the code classifies by use rather than by permanence. Queensland's development code already includes demountable structures within its temporary accommodation part and defines sleeping compartments and communal facilities — a standard to adapt nationally rather than invent.

The standards. Minimum room size, shared living space and work space, set as figures that can be measured, with fire and egress stated as outcomes and an accepted route to meeting them.

The standards are the load-bearing part of the whole proposal. The United Kingdom allowed office conversion from 2013 without them and produced substandard apartments with documented consequences for the people in them; Australia purchases motel rooms as crisis accommodation without support and a review found nearly ten nights of supported accommodation could be funded for the cost of one night without it. Neither failure was caused by the building.

Tenure. Memo 7 relies on portability — a resident who leaves takes the dwelling. Nothing can be moved here, so security of tenure does that work instead: a written occupancy agreement with defined grounds and periods for termination; access to a tribunal on the same footing as a residential tenant; rules on fee increases and on changes to communal facilities during an agreement; continuation of the agreement when the building is sold; and a long-term form for residents who want one.

Land lease legislation already provides most of this to residents over 55, and tenancy law provides it to tenants of whole dwellings; neither reaches a resident of a room in a converted commercial building.

The supported tier. Permanent supportive housing has operated in single city buildings at Elizabeth Street Common Ground since 2010 and Brisbane Common Ground since 2012 — support on site, tenancies mixed rather than concentrated, and a measured net saving of about $13,100 a tenant in the first year housed against a year sleeping rough. Under the NDIS, Specialist Disability Accommodation funds the dwelling and Supported Independent Living funds the workers in it. The scope is the same as Memo 7 states it: housing with support attached, not a treatment service, a refuge or crisis accommodation.

4. The fitout: the German example

Germany already runs the split this proposal relies on, as ordinary rental practice: an apartment is let as a shell, and the tenant brings the kitchen and takes it on leaving. A city community is the same division at building scale — the wet areas are the building's, everything else is demountable, and at the end of the term the fitout comes out the way a German kitchen does. That is what makes the reversion real.

Temporary fitout is a path in its own right — supplying, fitting and recovering the fitout for the term is an industry, and it gives a commercial owner options. This memo notes the path and leaves the detail to its own work.

5. What would have to change

Eleven changes, across three levels of government. None requires a new program. There is currently no standard compliance route in the building code for changing the use of an existing building — every conversion needs its own engineered case — and submissions to the Commonwealth's 2026 code consultation say this biases the industry toward demolition.

Building code.

• A standard compliance route for changing the use of an existing building.
• Minimum standards for room size, shared living space and work space, set as measurable figures.
• Fire and egress requirements stated as outcomes, with an accepted route to meeting them.
• A national standard for rooms with shared facilities, including demountable construction, adapted from the Queensland provisions.

Planning.

• A named use, permitted in commercial zones without rezoning.
• The fixed term and the reversion conditions, and a permanent variant where an owner wants one.
• Permitted enterprise assessed against performance standards rather than a list of named uses.
• Removal of minimum car parking rates for conversions, with rates and land tax treatment stated at the outset.

State revenue.

• A vacancy charge on long-term empty commercial floor space, discharged by occupation, including occupation for a fixed term. Victoria already charges 1 to 3 per cent of value on a home left empty; no commercial equivalent exists anywhere in Australia, so an empty office floor costs its owner almost nothing.

Commonwealth.

• Shared communal facilities should not trigger the reduced sharer rate of Commonwealth Rent Assistance — the shared kitchen at the centre of this model is exactly what triggers it today.
• Rooms with shared facilities should count as eligible dwellings for Housing Australia funding, which flows only through registered community housing providers, governments, or consortia including one.

The last two cost nothing, and both currently operate to exclude this form of housing from support that already exists.

The trials. Three figures decide whether this is worth doing, and none can be established from published data: cost per room delivered, the weekly rate a resident would pay, and how many existing dwellings are released. A small number of buildings of different types — an office floor, a shop-top, a motel — measured on a common basis would establish them within two years, with resident social connection measured at entry and at twelve months, since the health claim otherwise remains unevidenced.

6. Summary

The city case is simpler still. The buildings are standing, the arrangement already operates lawfully as student accommodation, and the people who need it — students, young workers, artists, older renters — are already living the unlawful version of it in overcrowded flats.

A fixed-term community matches the two: private rooms and shared floors in buildings earning nothing, at a low cost of living with a community attached, reverting to commercial use when the term ends. Eleven changes across three levels of government create the pathway, the German fitout practice shows the reversion can be real, and three trial figures decide the rest. The cheapest housing Australia can build is the housing it has already built.

And together with its rural companion, this is the answer to the housing crisis itself. The two solutions capture the supply Australia already has and is not using — buildings standing empty in the cities, and rural land that may not lawfully house anyone. The supported tiers house people who have no dwelling at all. The rest lowers the cost of being housed: a room that costs less than any self-contained dwelling, and the dwellings released back to the market behind it.

7. Sources

1. Property Council of Australia, Office Market Report, January 2026 — national office vacancy of 15.9 per cent; CBD 14.8 per cent and non-CBD 18.5 per cent; Melbourne CBD 19.0 and Perth 16.9 per cent; and the concentration of demand in premium and A grade with secondary grades recording negative demand, identifying the emptying stock as older and lower grade. Cited in section 2.
2. Tenant CS, Australian CBD Office Leasing Market Report, Q1 2026, and Knight Frank Melbourne CBD reporting, with Property Council commentary on face and effective rents — Melbourne B-grade space advertised at $614 a square metre against an effective rent of $307, with incentives averaging about 48 per cent across the city. Cited in section 2.
3. JLL Research and CBRE retail market reporting, 2026 — national shopping centre vacancy of 4.4 per cent in the first half of 2026, the lowest since 2018, with softening attributed to arcades and upper-level tenancies. Cited in section 2.
4. New South Wales Standard Instrument — Principal Local Environmental Plan, definition of shop top housing; and the state heritage registers of New South Wales, Western Australia, Queensland and Tasmania with associated architectural histories — the two-storey shop-residence as a standard Australian building type, and the record of 413 shop-residences in Newtown in 1892 against 20 buildings serving solely as shops. Cited in sections 2 and 3.
5. Hassell, for the Property Council of Australia in partnership with Ethos Urban — identification of 86 Melbourne CBD office buildings suitable for conversion, capable of producing more than 10,000 homes, focused on buildings constructed before 1990. Cited in section 2.
6. CBRE Australia student accommodation research, Ray White Group research, and Property Council of Australia, Australia's Student Accommodation Pipeline: June 2026 Update — more than 1.6 million students enrolled annually against approximately 90,000 private purpose-built beds, one bed for every fifteen students; and student accommodation rents of $550 to $850 a week in Sydney. Cited in section 1.
7. Analysis prepared for the Student Accommodation Council, and Cushman & Wakefield commentary on purpose-built student accommodation — the under-supply of student beds in Western Australia relative to comparable markets. Prepared for an industry body rather than an independent series. Cited in section 1.
8. Nasreen and Ruming, research on shared room housing and overcrowding in Sydney, with associated reporting — average occupancy above 2.5 occupants a room across Pyrmont, Ultimo, Haymarket, Chippendale, Surry Hills and Darlinghurst; two-bedroom apartments commonly holding five to fourteen occupants; conversion of bathrooms and living rooms into bedrooms and removal of smoke detectors; the death of an international student in an apartment fire at Bankstown in 2012; beds advertised at $150 a week in Melbourne with a two-bedroom apartment offered to eight occupants; and the inability of private landlords to obtain permits to convert properties to shared accommodation in the absence of a planning definition. Cited in section 1.
9. Property Council of Australia and Retirement Living Council analysis of Australian Institute of Health and Welfare Commonwealth Rent Assistance quarterly data (November 2025) — renters aged 75 and over receiving rent assistance and remaining in rental stress rising from 25,485 in 2013 to 55,030 in 2025. Cited in section 1.
10. Australian housing research on older renters, including Australian Institute of Health and Welfare specialist homelessness services reporting — older people as the fastest growing group within the homeless population and older women as the fastest growing group of all. Cited in section 1.
11. Creative Australia, Artists as Workers by David Throsby and Katya Petetskaya (2024), and City of Sydney, Greater Sydney Creative Spaces Affordability Study (survey May 2025) — a median creative income in Greater Sydney of $5,000 a year with approximately 80 per cent spent renting workspace, and a recorded 28 per cent decline in creative spaces. Cited in sections 1 and 2.
12. Ending Loneliness Together, State of the Nation and Why we feel lonely — from a nationally representative sample of 4,026 Australians aged 18 to 92, one third feeling lonely some or all of the time, with 18 to 24 the most affected age group. Loneliness is self-reported and measured differently between studies. Cited in sections 1 and 2.
13. Carrere and others, scoping review of the effects of the cohousing model on health and wellbeing (2020) — increased social support and reduced isolation, strongest where residents run the shared facilities; and an evidence base of small cross-sectional studies supporting an association rather than a treatment effect. Cited in section 2.
14. Australian Building Codes Board, National Construction Code — the classification of accommodation for unrelated people as Class 3, and Part F6 requiring natural light to bedrooms and dormitories in Class 3 buildings rather than to every room. Cited in section 3.
15. Studies of office-to-residential conversion feasibility, including the New York City Comptroller's analysis drawing on Gupta, Martinez and Van Nieuwerburgh (2023) — residential unit depth workable at approximately nine to eleven metres from window to core, identifying narrow pre-1990 floors as the convertible stock. Cited in section 2.
16. Submissions to the Commonwealth Treasury consultation on modernising the National Construction Code, 2026, including that of the Australian Institute of Architects — the finding that the Code provides no clear route for working within existing buildings and that this creates a bias in the industry towards demolition. Cited in section 5.
17. Victorian Land Tax Act 2005, Division 6 of Part 4A, and State Revenue Office Victoria guidance — vacant residential land tax at 1 per cent of capital improved value, escalating to a maximum of 3 per cent, with no commercial equivalent in any Australian jurisdiction. Cited in section 5.
18. United Kingdom permitted development rights for office-to-residential conversion, extended from 2013, with Australian professional commentary on their outcomes — schemes containing large numbers of apartments of substandard size and amenity, with documented consequences for resident health. Cited in section 3.
19. German residential tenancy practice, widely documented in German consumer and housing guidance — apartments commonly let without a fitted kitchen, with tenants purchasing, installing and removing their own kitchens and fittings on leaving, while bathrooms are provided by the landlord. A description of standard market practice rather than a statutory requirement. Cited in section 4.
20. Australian Housing and Urban Research Institute, Crisis accommodation in Australia: now and for the future (Final Report No. 407), and Homelessness NSW, Temporary Accommodation Program — A Review (April 2016) — the purchase of short-term accommodation from private motel and boarding house operators, described as often inappropriate and providing little or no support; and the estimate that nearly 1,460 nights of accommodation with support could be provided for the cost of 152 nights without support. Cited in section 3.
21. City of Melbourne, Postcode 3000 program and Adaptive Reuse of Office Buildings Guidelines; and Renew Newcastle (established late 2008) with Renew Australia — the conversion of vacant upper floors of central Melbourne buildings through the 1990s; the thirty-day rolling licence, operator-carried public liability insurance, approximately 130 projects placed in about 60 empty buildings over four years, and the adaptation of the licence agreements into public templates by the Arts Law Centre of Australia. Cited in section 2.
22. Australian permanent supportive housing providers and literature, including Elizabeth Street Common Ground, Melbourne (2010) and Brisbane Common Ground (2012), with analysis using linked government administrative data — single-building operation with support on site and mixed tenancies, and a net saving of approximately $13,100 a tenant in the first year housed compared with a year sleeping rough. Cited in section 3.
23. National Disability Insurance Scheme, Specialist Disability Accommodation and Supported Independent Living — the division between SDA, which funds the dwelling, and SIL, which funds support workers. Cited in section 3.
24. Queensland Development Code MP 3.3, Temporary Accommodation Buildings and Structures — the inclusion of transportable and demountable structures within the definition of structure, and the definitions of sleeping compartment and communal facilities. Cited in sections 3 and 5.
25. Western Australian Department of Mines, Industry Regulation and Safety data and Australian workforce accommodation industry material, 2026 — modular workforce accommodation manufactured off site from approximately $1,800 a square metre with delivery in five to seven months. Industry material rather than an official series. Cited in section 2.
26. Sovereign Australia Party, Rural Communities (Memo 7) — serviced lot development costs of $126,811 in Victoria and $170,899 in New South Wales; the average Victorian precinct structure plan taking 4.2 years to gazettal; detached house completion times of 11.5 months nationally and 15.45 months in Western Australia; the portability of dwellings between rural communities; and the restriction of land lease communities to residents over 55. Cited in sections 1, 2 and 3.
27. Services Australia, Commonwealth Rent Assistance, and Housing Australia programme guidance — the sharer classification applying to a single person without dependent children who shares a kitchen, bathroom or main living area, with a materially lower maximum rate; and eligibility for Commonwealth housing funding limited to registered community housing providers, governments, Indigenous and defence housing organisations, and consortia including one such entity. Cited in section 5.