A new tax on spare bedrooms has been proposed as a bold solution to fix Australia’s crippling housing shortage.
As the federal government struggles with its goal to build 1.2 million new dwellings within the next four years, property researchers have warned that the right homes may not be being built.
New data has revealed more than 60 per cent of Aussie households consist of just one or two people, yet the majority of dwellings are being built for families, with three or more bedrooms.
Property research group Cotality described the situation as a ‘stark mismatch’ between Aussies who live in homes and the type of housing dominating the market.
Cotality’s head of research, Eliza Owen believes the imbalance raises serious questions about whether the housing system is meeting residents’ needs, particularly amid rising affordability and supply pressures.
‘While there’s nothing wrong with having more bedrooms than people in a dwelling, there could be some inefficiencies in the way housing is being allocated,’ Ms Owen told ABC Radio.
At the 2021 Australian Census, more than 1.3 million two–person households were living in three–bedroom homes, outnumbering households with three or four residents in similar dwellings.
The data also revealed that families with dependents made up around 30 per cent of households, couples without children 31 per cent, and people living alone 27 per cent.
New data has revealed that more than 60 per cent of Aussie households consist of just one or two occupants. Pictured are homes in Brisbane
Cotality’s head of research, Eliza Owen, (pictured) has called for a tax on spare bedrooms
Yet the most common dwelling size remains three bedrooms or more.
One person households account for over a quarter of homes, but one–bedroom or studio apartments represent just six per cent of housing stock.
Ms Owen acknowledged that many households have their reasons for larger homes.
‘With the rise of the home office, the desire for in–home care later in life, and space for hobbies and visitors, having additional bedrooms is potentially very attractive,’ she said.
‘It’s also reasonable to assume many couple households without dependents have more bedrooms because they are planning to have children.’
But Ms Owen argued that bold reforms are needed to address the housing crisis.
‘Governments could make it more expensive to have more housing than you need, and cheaper to live in smaller housing,’ she said.
Others have advocated for tax changes, such as abolishing stamp duty, which can discourage mobility, and replacing it with a broad–based land tax that would increase costs based on the amount of land a household owns.
the federal government aims to build 1.2 million new dwellings within the next four years. Pictured is housing construction in Sydney’s north-west
Eliza Owen says that bold reforms are needed to address Australia’s housing crisis
‘It seems unfair to ask younger households to pay higher prices for stock that is being utilised by older households,’ Ms Owen added.
While the share of apartments and units has risen to around 40 per cent of approvals in the past decade, more ‘missing middle’ housing like townhouses and low–rise apartments are needed.
‘Strides are already being taken on the supply side to establish well–located apartments in our larger cities that can accommodate smaller households,’ Ms Owen said.
‘But shifting demand through tax reform could help the take–up of these new homes.’
Ms Owen conceded that the spare room tax proposal is controversial but insisted that radical thinking is essential.
‘If we want a system that works for the next generation, then we need to be open to reforms, – even the ones that are politically difficult,’ she said.
