A new form of housing, known as “co-located housing,” is being positioned as a promising solution to Australia’s growing housing supply challenge—and it’s gaining traction just as mortgage conditions are expected to ease.
South Australia has become the first state to formally introduce planning laws to allow co-located housing in suburban areas. According to a report from realestate.com.au, the approach retains and extends existing homes to accommodate multiple dwellings, rather than knocking them down for denser redevelopment.
“This is a model that looks to the patterns of alterations and additions that people have been doing for generations,” said a leading architecture academic involved in the planning reforms. “[It] allows them to make multiple homes out of that building, rather than just making a single house bigger.”
The model, also referred to as “bluefield housing,” is distinct from conventional co-housing. It focuses on individual ownership, avoids subdividing land, and prioritises shared gardens and mature trees. New guidelines require a minimum of 24 m² of communal open space per dwelling, along with shared parking and safe pedestrian access.
Six councils in South Australia have been invited to implement the changes locally before a possible statewide expansion. The concept has also attracted interest from planners in other jurisdictions, including the ACT, where similar models have required amendments to existing territory plans.
Originally developed with downsizers in mind, the model has wider appeal. Younger buyers and multigenerational families are also exploring it as an alternative to traditional housing arrangements.
“It’s not about solving the housing crisis overnight,” the academic said. “But it adds a practical option for adding smaller, more affordable homes within existing suburbs.”
The rollout of co-located housing comes as the Reserve Bank of Australia is widely expected to announce a 25 basis point cut to the official cash rate at its next meeting. The cut would bring the rate to 3.85%, dropping below 4.0% for the first time since May 2023.
“Our team at Bell Partners Finance has been getting a lot of inquiry from customers about fixed rates to protect themselves in the event of economic hurdles forcing rates to rise again,” said the firm’s managing director.
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