Australia is confronting a severe housing shortage as population growth and construction delays put pressure on affordability.

Recent research shows that while more than sixty per cent of homes are occupied by only one or two people, over seventy-five per cent of dwellings contain three or more bedrooms.

The imbalance has led to proposals that include taxing unused bedrooms or creating incentives for homeowners to make better use of their spare space.

Options under consideration include replacing stamp duty with a broad-based land tax to ease downsizing, alongside reforms to pension asset tests that currently discourage older homeowners from renting out rooms.

Analysts estimate that around three million homes have two spare bedrooms, another three million have one, and more than one million have three or more.

Many of these properties are owned by older Australians described as “asset-rich and income-poor.”

Studies indicate that concerns about pension eligibility and tax liabilities deter many from letting spare rooms.

Proposals advanced by some experts include exempting non-commercial board and lodging arrangements from taxable income, and expanding work bonus schemes to allow additional earnings without affecting pension benefits.

Government discussions continue over wider housing supply measures, including planning regulation changes, innovation in construction, and labour force development.

Policymakers have acknowledged delays in meeting new housing targets, prompting increased attention on how to make existing housing stock more efficient.