A new report by Cushman & Wakefield, developed in partnership with Haven Home Safe, highlights a growing mismatch between housing supply and demographic demand and argues that addressing it could unlock both social and investment opportunities.
Australia’s housing system is worth an estimated $12.3 trillion, making it significantly larger than the entire Australian stock market. Over the next 40 years, that figure is expected to grow by another $6.3 trillion, reinforcing housing as one of the country’s most significant economic sectors.
Yet despite this enormous scale, the research suggests the housing system has failed to evolve alongside demographic change.
For decades, development has largely prioritised larger, detached housing, even as Australian households become smaller, older and increasingly diverse.
One of the most significant shifts is the rise of lone-person households. These are forecast to grow to 3.7 million over the next 40 years, making them the fastest-growing household type in the country. However, the supply of smaller apartments and medium-density dwellings is not keeping pace, with only 900,000 additional apartments expected to be delivered over the same period.
At the same time, Australia is seeing the emergence of a new demographic reality: the lifelong renter.
As the population ages, more Australians are expected to reach retirement without owning their home. The report notes that the number of renters aged 65 and over is projected to increase by 95 per cent by 2031, placing growing pressure on the housing system to provide stable and suitable options for older Australians.
Compounding this challenge is the widening gap in social and affordable housing. Meeting Australia’s future social housing demand could require around $183 billion in investment and approximately 640,000 additional dwellings by 2041.
According to George Housakos, Associate Partner, Strategic Consulting at Cushman & Wakefield, and co-author of the report alongside colleague Josh Drake, Associate Director, Strategic Consulting, the issue is not simply about building more homes but building the right homes.
“Housing supply has historically been driven by what the market can easily deliver, rather than what people actually need,” Mr Housakos said.
“What our research shows is that Australia’s demographic profile is shifting quickly: households are getting smaller, more people are renting for longer, and the needs of vulnerable cohorts are increasing. If housing supply doesn’t adapt, the gap between demand and suitable housing will continue to widen.”
The report argues that addressing this mismatch requires a people-focused approach to housing development, built around three key principles: housing security, housing suitability and housing attainability.
Housing security asks whether people can remain confidently housed in the long term. Housing suitability considers whether the dwelling actually meets the needs of its occupants and community. Housing attainability focuses on whether the right housing is available and affordable.
Together, these factors provide a framework for housing providers and investors to better align future development with emerging demand.
The research also highlights significant geographic variation in housing need, with regional and peri-urban areas expected to see a near doubling in the number of low-income renters aged over 50.
For housing developers, investors and policymakers, these structural shifts represent both a challenge and an opportunity.
Josh Drake, Associate Director, Strategic Consulting at Cushman & Wakefield, said organisations that adopt an evidence-based approach to housing delivery including partnerships with community housing providers and targeted housing models, are likely to be better positioned as demand evolves.
“Housing that responds to real demographic demand will ultimately deliver stronger outcomes not just socially, but economically,” he said.
“As the housing system evolves, there is a significant opportunity for developers, investors and governments to work together to deliver housing that better reflects how Australians actually live.”
