In a time where soaring house prices have become the norm rather than the exception, a new property trend is capturing the imagination – and wallets – of Australians: housing co-ownership.

From mates pooling funds to multi-generational family arrangements, co-ownership is fast becoming the solution to housing unaffordability across the country. But this isn’t just a strategy for getting a foot on the property ladder; it’s reshaping the very concept of homeownership in Australia.

With data from CoreLogic, Domain, and the ABS, let’s dive into why co-ownership is making waves and why it might just be the most financially savvy approach for Aussies priced out of the traditional housing market.

A Reaction to a Property Market Out of Reach

Let’s be honest – Australian housing prices are astronomical. CoreLogic data shows that Sydney’s median house price is currently circa 1.5m, and Melbourne isn’t far behind at 930k.

For younger Australians and even established professionals, saving for a traditional 20% deposit has become a near-impossible feat. Enter co-ownership: a shared approach that brings down the cost of entry without skimping on the long-term investment potential.

According to Domain’s latest report, co-ownership inquiries have surged by 35% over the past year. And while the idea of jointly owning a home isn’t new, the attitude towards it has shifted drastically.

For many Australians, co-ownership is not a last resort but a savvy financial move, akin to starting a joint investment portfolio. In a way, it’s “home-hacking” at its best – splitting costs, sharing benefits, and taking advantage of a robust market.

Based on current data, it is likely co-ownership trends will continue for at least the next 5 years. This trend is re-shaping what it means to be a home owner for Millennials and Gen Z. The outdated Baby Boomer stereotype of the large block with freestanding home that can be financed on only one income is long gone…

To see just how high prices have soared in your area, visit CoreLogic’s latest property data: https://www.corelogic.com.au/.

The Legalities and Logistics

Co-ownership isn’t just about going halves on a mortgage. It’s a legally binding partnership that requires clear agreements, carefully thought-out terms, and a bit of trust. Here’s a look at the practicalities involved:

>>> Joint Tenancy vs. Tenancy in Common

In Australia, most co-ownership arrangements fall into two categories: Joint Tenancy and Tenancy in Common. Joint Tenancy often suits family members or couples, as each party holds an equal share and, if one passes away, the property automatically transfers to the other owner. Tenancy in Common, however, allows individuals to own different percentages of the property – a flexibility that appeals to non-relatives or friends entering a co-ownership agreement.

>>> The Co-Ownership Agreement

A robust legal agreement is essential. This outlines the terms of purchase, financial contributions, maintenance responsibilities, and importantly, the exit strategy.

Who gets first right to buy if one party wants out? How will the property be valued for resale? Think of this as the prenup for property buyers. It’s a very important step so that you’re planned for your future with water tight legal paperwork.

Co-owning a home without an agreement is like taking a road trip without a map – exciting until someone wants to take a different route. Plan it well, and you’ll avoid dead ends (and horror stories!).

Why Co-Ownership Appeals to Different Types of Buyers

It’s not just young buyers who are embracing co-ownership; the appeal is broad. Let’s look at some co-ownership archetypes that reflect this growing trend:

>>> The First-Home Buyer Friends

With the average first-home deposit in Sydney at $130,000 or more, many young Australians are teaming up with friends to co-own. This strategy allows them to split the deposit, share ongoing costs, and – if the market continues its upward trajectory – build equity faster than if they saved alone. 

SQM Research shows that over 40% of Millennials are open to co-owning with friends if it means they can enter the property market sooner rather than later.

>>> Multi-Generational Families

Co-ownership arrangements are gaining popularity with multi-generational families too. A large family home bought by two siblings or cousins, for instance, could serve as a dual residence, rental income source, or holiday home, with flexibility for future selling options. Given Sydney’s high rental prices, this option offers both security and investment potential.

>>> The Investor-Builder Duo

For savvy buyers, co-ownership is an investment strategy. One partner might invest financially, while the other brings renovation skills to boost property value. With Sydney’s renovation culture booming, this “sweat equity” approach offers potential returns for both.

Curious about how co-ownership agreements work? Lawpath offers a free guide on setting up co-ownership agreements in Australia here: https://www.lawpath.com.au/.

Does Co-Ownership Increase Market Competition?

Interestingly, the rise in co-ownership is having an impact on housing competition. As more people team up to buy properties, competition heats up in the market’s lower end, driving prices even higher in some suburbs.

But, as Domain notes, the affordability ceiling is eventually hit, with shared ownership simply allowing more people to participate in the market without fundamentally altering overall demand.

Co-ownership is like buying concert tickets with friends to split the cost of VIP seats – it lets you enjoy the show, but it doesn’t bring the ticket prices down.

Potential Risks and Downsides of Co-Ownership

While co-ownership offers a path into the property market, it comes with challenges.

Conflicts can arise over property use, renovation decisions, or selling timelines. Additionally, financial situations can change, and one party’s need to exit the arrangement may lead to unexpected costs or even a forced sale if terms aren’t clearly defined in advance.

The ABS also notes a rise in disputes related to property co-ownership, particularly when individuals face unforeseen financial pressures, such as job loss or a market downturn.

Be sure to enter a property purchasing agreement with a trusted individual and have everything legally in writing. It will save you potential headaches in the future.

Is Co-Ownership Here to Stay?

Co-ownership is proving to be more than a fleeting trend. It’s a practical and financially viable model that, while initially born from necessity, is gaining appeal as a sustainable strategy for investment and homeownership.

As long as Australian property prices remain high, and the younger generation seeks ways to combat housing inaccessibility, co-ownership will likely become a permanent fixture in the market.

A recent report from CoreLogic suggests that shared ownership structures could account for up to 20% of property purchases by 2030 if current trends continue.

I believe this is a conservative estimate in Sydney, with co-ownership likely to account for 30% (or more) of property purchases for the Generation Z buyer cohort.

Tips for Success

If co-ownership sounds like the right move for you, keep these tips in mind:

Choose Your Co-Owner Wisely. Align on lifestyle, finances, and future goals.

Draft a Detailed Agreement. Get legal advice and ensure all aspects – exit clauses, maintenance costs, and profit division – are covered.

Stay Financially Transparent. Regularly review financial contributions, and avoid unbalanced arrangements to maintain harmony.

By checking these 3 points off your list you’re setting yourself up for the best possible co-ownership scenario possible.

For more co-ownership tips, Canstar offers advice on making co-ownership work here: https://www.canstar.com.au/).

Need Help? Talk to Kitty & Miles

As Australia’s property market continues to evolve, so should your approach to buying. At Kitty & Miles, we specialize in innovative solutions for property buyers, including co-ownership guidance and investment strategies.

Our team of expert sydney property buyers agents can help you understand the market, find the perfect co-ownership partners, and navigate the complexities of shared ownership.

Contact Kitty & Miles today for a FREE introductory consultation, and let us help you take a smart, strategic approach to Sydney property.

Final Thoughts

Co-ownership isn’t a stopgap solution – it’s a forward-thinking approach to Australian homeownership.

With clear agreements, compatible partners, and the right real estate expertise, co-ownership offers a solid, accessible path into the market for those who are ready to buy now rather than waiting for property prices to magically drop.

Think of co-ownership as the Airbnb of the property market: share what you need, make it work for your life, and reap the benefits. And who knows? With the right setup, it might just be the smartest way to own a slice of Australia’s booming property market.