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Australian households are mostly one or two people, but analysis shows the housing stock is dominated by three-and four-bedroom properties.
Couples without kids and people living alone make up 61 per cent of households, raising the question of how well a housing market focused on bigger families is serving real demand.
A comparison between the number of people in a household and data on housing by number of bedrooms shows a stark mismatch, according to the latest analysis from property research firm Cotality.
Research head Eliza Owen said a potential solution could lie in government housing reform.
Governments could make it more expensive to have more housing than needed, and cheaper for those who opt to live in smaller properties.
Abolishing taxes such as stamp duty could make it cheaper for those to move across different housing, and the introduction of a broad-based land tax would raise costs for those who own more land.
“It may not be politically popular, but there is widespread agreement among economists that it would contribute to a more efficient housing market,” she mentioned to the Australian Associated Press.
The data also highlights the high number of empty-nest households of people aged 65 and over.
“There’s a lot of scope for older Australians to leave their homes to free up homes for younger generations,” Owen added.
“But it’s really hard to implement taxes to encourage people to downsize.
“Things like broad-based land taxes are an incentive for income-poor but asset-rich Australians to downsize.”
Strides are already being taken on the supply side to establish well-located apartments in larger cities to accommodate smaller households, but shifting demand through tax reform could help the take-up of these homes.
“It’s a tough transition to make,” Owen said.
“But it’s also a really hard ask to young families to pay a million dollars to own a house in one of our major cities.”
