POLICY PAPER

Life-Stage Housing for Young Families

Designing housing for young families, as Australia already does for older Australians

Pronatalism Australia · July 2026

Executive Summary

Australia already accepts that housing should respond to life stage. Retirement villages and over-55s developments are a routine part of the housing system, designed around the predictable changes that ageing brings to mobility, health, and social needs. This recognition has never been extended to the beginning of family life. Young families face constraints that are structurally comparable to those of older Australians, yet housing policy largely ignores them.

The problem is one of timing, competition, and dwelling suitability. Families need more space at the point when their earning capacity is most constrained, and they compete for that space against dual-income households without children, retirees downsizing from larger homes, and investors with accumulated equity. A market that allocates dwellings by purchasing power crowds out the households with the least financial capacity at the moment of greatest need. Because decisions about family size are made in the physical reality of a home, housing constraint feeds directly into realised fertility.

This paper argues that housing policy should treat families with young children as a distinct group with distinct needs, in the same way it already treats older Australians. It sets out why dwelling type matters as much as dwelling count, why locating families near one another improves the odds that fertility intentions are realised, and how the incremental evolution of over-55s housing offers a workable precedent. Its central instrument is a purchase restriction that reserves designated dwellings for eligible families, insulating them from competition with more financially capable buyers. It then proposes how such housing could be recognised, encouraged, and normalised.

Policy Recommendations

Pronatalism Australia recommends that Australian governments:

recognise family-stage housing as a distinct planning category, defined by the presence of at least one child below a set age;
restrict the purchase of family-stage dwellings to eligible families, insulating them from competition with more financially capable buyers;
create the zoning, density, and approval pathways that make family-suitable developments viable, as was done for retirement villages;
assess family housing against suitability, including bedroom count, internal flexibility, and access to private or shared outdoor space, rather than counting dwellings alone;
enable co-location, allowing families to cluster near one another, near services, and near over-55s housing so that grandparents can live close to their grandchildren; and
apply time-limited eligibility, so that a designation lapses after a defined period and the housing returns to the general market.

1. Housing constraint as a fertility constraint

Australia’s total fertility rate fell to 1.48 births per woman in 2024, the lowest since national records began in 1924 and well below the replacement level of about 2.1.¹ The decline is not explained by a collapse in the desire for children. Australians continue to report wanting families of around two children, yet only about 30 per cent have reached their desired family size by the age of 35.² The gap between the families people intend and the families they achieve is where housing does much of its quiet work.

Families need more space at precisely the point when their earning capacity is most constrained. The arrival of children coincides with a sustained fall in household income, concentrated on mothers. Treasury analysis finds that women’s earnings drop by an average of 55 per cent across the first five years after a first child, driven mainly by reduced workforce participation and hours, with the gap still visible a decade on.³ For the years when a family most needs room to grow, it often operates on one income or something close to it.

At the same time, families compete for housing against households with far greater purchasing power: dual-income couples without children, asset-rich retirees downsizing from larger homes, and investors with accumulated equity. A flat market does not register these differences. It allocates space to whoever can pay, which means the households with the least financial capacity are asked to compete hardest at the moment of greatest need. Families already raising children are crowded out of the dwellings that would let them remain stable and expand.

These are not abstract pressures. Decisions about whether to have another child are made in kitchens, bedrooms, and hallways. The question usually turns on whether there is room, physically and psychologically, to absorb another child without forcing a disruptive move. When the honest answer is that there is not, the decision tends to make itself.

2. Supply is not the same as suitability

Housing debate in Australia is dominated by the number of dwellings. Supply matters, but a housing system can add dwellings while undersupplying the kinds of homes that support family formation. Apartments and units count as dwellings in the statistics, yet they are not neutral substitutes for houses once a family begins to grow.

The evidence points to dwelling type as an influence on fertility that is partly independent of price. Research on housing and childbearing finds that one- and two-bedroom apartments have the strongest negative association with fertility, while apartments with three or more bedrooms show little difference from detached houses of comparable size.⁴ The binding constraint is usable family space. A home with enough bedrooms, internal flexibility, and the capacity to take another child without triggering relocation supports family growth. A smaller dwelling may be adequate for a couple or a single child and become a hard limit soon after.

Tenure compounds the effect. Housing wealth and security are positively associated with childbearing among owners, while renters facing rising prices tend to defer or forgo children as the market climbs.⁵ Fertility has fallen most steeply in Sydney and Melbourne, where prices have risen fastest and family-suitable dwellings are least accessible.⁶ A system that eases price pressure by delivering large numbers of small dwellings, while access to expandable family homes narrows, may look successful on a dwelling count while quietly reducing the number of children who are born.

Family-suitable housing also extends beyond the walls of the home. Children need space outside it. Developments that provide only cramped apartments or narrow townhouses, without gardens or safe communal areas, push children indoors and towards screens, and deprive them of the unstructured outdoor play that supports healthy development. A serious account of family housing includes yards, gardens, and well-designed shared outdoor space as part of what makes a dwelling fit for raising children.

3. The over-55s precedent

Australia has already built an entire housing category around a single life stage. The precedent matters as evidence rather than as a template. It shows that the country can recognise stage-specific housing needs and build durable institutions around them.

Age-restricted housing did not arrive through a single government mandate. It grew incrementally. The first retirement village is generally traced to Brisbane in the 1920s, when a Methodist congregation established accommodation for ageing widows.⁷ Churches and charities led the early development of housing for older Australians with shared needs, and not-for-profit and church operators still account for around 40 per cent of the sector, which now houses roughly 170,000 people across some 140,000 dwellings.⁸ The private sector expanded the model from the 1980s, and governments later codified it. Every Australian jurisdiction now has retirement villages legislation, and age-restricted villages are one of the few housing forms expressly exempted from age discrimination law.⁹ Councils adjusted zoning, density rules, and approval pathways to make such developments viable. Over time, the idea that older people might benefit from living near others at the same stage of life became culturally unremarkable.

The principle underneath all of this was fit-for-purpose housing. It rested on the recognition that different stages of life carry different needs, and that treating every household as interchangeable is neither fair nor efficient. It also rested on restricted eligibility: a retirement village is reserved for those who meet an age threshold, and is not open to the wider market. That combination of principle and mechanism does not belong only to the end of life. It applies with equal force to its beginning, and it opens a possibility the market never delivers on its own, which is bringing the generations back into proximity.

4. Family co-location and intergenerational proximity

Housing shapes more than the size of a dwelling. It shapes who lives near whom. Families benefit from proximity to other families in ways that compound over time. Children develop socially when surrounded by peers. Parents experience less isolation. Informal childcare, shared norms, and mutual support emerge naturally when families live close together. These effects strengthen individual households, and they make family life more sustainable across successive generations.

Contemporary housing patterns tend to disperse families rather than cluster them. Parents are pushed further from extended family, further from services, and often further from other parents. Children grow up with fewer nearby peers, and the neighbourhood-based childhood that once made larger families more manageable becomes harder to sustain. This dispersal is the predictable outcome of a housing system that treats families as incidental rather than foundational, allocating dwellings one household at a time with no regard for the social fabric that family life depends on.

There is a further opportunity in bringing the two ends of the life course together. Locating family housing near the over-55s developments described above would allow grandparents to live close to their adult children and grandchildren. Grandparental proximity is one of the more dependable supports for higher fertility. It lowers the everyday cost and effort of raising children, provides a ready source of informal childcare, and makes a further child feel manageable rather than overwhelming. The same planning system that clusters families could deliberately site family housing and age-restricted housing within easy reach of one another, so that the support grandparents provide is a matter of distance measured in streets rather than states.

None of this is sustained by encouraging births in the abstract. It is sustained by creating environments in which family growth is spatially, socially, and economically supported. Co-location is one of the clearest levers available. Housing that allows families to grow in place, alongside other families and near grandparents, improves the odds that fertility intentions are realised rather than quietly abandoned.

5. Designing family-stage housing

Family-stage housing need not arrive fully formed, any more than retirement villages did. It can emerge through the same combination of planning recognition, zoning flexibility, community-led initiative, and gradual cultural normalisation. The following instruments describe how governments could begin.

Recognise family housing as a planning category. The foundational step is definitional. A family-stage dwelling or development could be defined by the presence of at least one resident child below a set age, mirroring the over-55 threshold that already anchors retirement housing. Recognition in planning instruments would allow the category to be zoned for, approved, and monitored, and would give councils and developers a stable definition to build around.

Restrict purchase to eligible families. This is the mechanism that makes the category more than a label. Family-stage dwellings would be available for purchase only to households with at least one child below the set age, removing them from open competition with dual-income couples, downsizing retirees, and investors. A family home that any buyer can bid for is allocated, as now, to whoever has the deepest pockets. A home that only eligible families may purchase is cordoned off from that competition, so that the households the housing is built for are not outbid by those with greater financial capacity. Over-55s housing already works on this principle of restricted eligibility, and the same logic applies at the start of family life.

Create enabling zoning and approval pathways. Retirement villages became viable because planning systems made room for them through density allowances, dedicated zones, and streamlined approval. Equivalent pathways for family-suitable developments would lower the cost and risk of building homes designed for family growth, particularly the larger dwellings and family-oriented medium-density housing that the market currently underprovides.

Set standards around suitability, not just count. Family housing should be assessed against the features that determine whether a family can grow in place: sufficient bedrooms, internal flexibility to reconfigure as a family changes, and access to private or well-designed shared outdoor space. Standards of this kind would ensure that dwellings counted as family housing are genuinely capable of supporting children, rather than small units that meet a numerical target while failing the purpose.

Enable co-location. Planning provisions could actively support the clustering of families, near one another, near the schools, parks, and services that family life relies on, and near over-55s housing so that grandparents can live within reach of their grandchildren. This is the social dimension of housing policy, and it is the hardest to deliver through dwelling counts alone. The community-led and not-for-profit developers who led the equivalent work for older Australians are well placed to lead here too.

Apply time-limited eligibility. A family designation need not be permanent, and permanence would risk creating rigid enclaves. A new development might reserve housing for families with young children for a defined period, of perhaps ten or fifteen years, with resale during that window limited to other eligible families. After the period lapses, the eligibility restriction is lifted and the housing enters the general market. This allows a development to serve its purpose through the critical years of family formation while preserving flexibility over the longer term.

These instruments would benefit from a consistent way of testing housing and planning decisions against their demographic effects. Pronatalism Australia intends to develop that mechanism, a fertility impact assessment, in a separate paper. Applied to housing, it would ask a straightforward question of major planning decisions: what will this do to the ability of families to form and grow.

6. Conclusion

Housing is not neutral. It shapes how people live, how they relate to one another, and whether family life feels stable or provisional. A pronatalist framework that ignores the structure of housing, and in particular dwelling type, the co-location of families, and who is allowed to buy, will struggle to convert fertility aspirations into families that actually form and grow.

Australia already designs housing for one stage of life, and reserves it for the people it is meant to serve. Extending the same fit-for-purpose logic to the beginning of family life is a modest conceptual step and a significant practical one. It asks the housing system to see young families as clearly as it already sees older Australians, to treat the conditions for raising children as a matter of public consequence, and to hold a place in the market for the families who need it. That is not a departure from what the country has accepted. It is the completion of it, and a practical investment in the country’s demographic future.

Endnotes

Australian Bureau of Statistics (2025), Births, Australia, 2024. The total fertility rate fell to 1.48 births per woman, the lowest since records began in 1924. abs.gov.au
Centre for Population (2024), Fertility decline in Australia: Is it here to stay?, and Australian Institute of Family Studies research on fertility decision-making. Around 30 per cent of Australians reach their desired family size by age 35. population.gov.au
Australian Treasury (2023), Children and the Gender Earnings Gap: Evidence for Australia. Women’s earnings fall by an average of 55 per cent across the first five years of parenthood. treasury.gov.au
On dwelling size and fertility, one- and two-bedroom apartments show the strongest negative association with fertility, while apartments with three or more bedrooms resemble detached houses of comparable size. propertyupdate.com.au
Housing wealth, fertility intentions and fertility, Journal of Housing Economics (2021), sciencedirect.com; and University of Sydney, “Hot housing market puts renters off having more kids” (2021), sydney.edu.au
Fertility has fallen most steeply in Sydney and Melbourne, where prices have risen fastest and family-suitable dwellings are least accessible. newgeography.com
“A potted history of retirement villages in Australia,” villages.com.au. The first village is generally traced to a Brisbane Methodist congregation in the 1920s. villages.com.au
Not-for-profit and church operators account for roughly 40 per cent of the retirement village sector, which houses around 170,000 residents across some 140,000 dwellings. Sources: villages.com.au and B. Martin, “Retirement Villages in Australia.” bmartin.cc
Retirement Villages Act 1999 (NSW), with equivalent legislation in every Australian jurisdiction; age-restricted villages are a rare example of express exemption from age discrimination law. legislation.nsw.gov.au