Australian homes of the future are likely to combine denser development, stronger energy-efficiency standards, lower-carbon materials and more factory-built components as governments and industry respond to housing shortages, construction costs and climate pressures.

While smaller homes are often predicted, Australian Bureau of Statistics data shows the clearest trend so far is actually smaller blocks. Across the capital cities, the average site area for new house approvals fell 13 per cent from 496 square metres in 2012 to 432 square metres in 2021, while average floor area slipped just 1 per cent. The ABS said this reflected higher land costs, more infill development and greater use of two-storey designs.

Energy performance is also becoming increasingly important. National Construction Code 2022 settings introduced a minimum 7-star NatHERS thermal performance standard and a whole-of-home energy requirement. NatHERS assessments consider heating, cooling, hot water, lighting and major appliances, as well as electricity generated by solar panels and stored in batteries. Higher-rated homes generally require less energy to remain comfortable and can cost less to run.

The materials used to build homes are also likely to change. The Department of Climate Change, Energy, the Environment and Water says embodied carbon – emissions associated with materials and construction – will become increasingly important as buildings become more energy efficient and electricity becomes cleaner. This is increasing attention on recycled products and lower-emissions materials, including timber and lower-carbon concrete and steel.

Prefabricated and modular construction is another area gaining momentum. The Australian Government’s 2026 national housing plan includes $39.3 million to help states and territories expand “kit of parts” construction technologies. The NSW Government is moving to establish a modular housing facility aimed at speeding up home delivery, according to a recent ABC News report.

Future homes may therefore look less radically different from the street than expected. The biggest changes could be in how they are designed and built: smaller lots, better insulation, efficient appliances, solar and battery integration, smarter controls and more components manufactured off-site.