Australia's smart home market to top AUD $11 billion

Telsyte forecasts Australia's smart home market will exceed AUD $11 billion in 2026, after rising sharply to AUD $7.7 billion in 2025.

Battery systems have become the main source of revenue growth, driven by government incentives and higher household energy costs. Smart batteries accounted for two-thirds of smart home market revenue in 2025, with battery revenue up 396 per cent year on year.

Outside batteries, the market still grew 19 per cent in 2025, pointing to broader demand across household technology categories. Adoption increased in energy, security and lifestyle products, led by smart appliances, smart security cameras and energy products.

By June 2026, 86 per cent of Australian households owned at least one smart home product, up 10 percentage points from 2024. The figures suggest the market is moving beyond early adopters into wider household use.

Budget shift

Household spending plans also rose despite pressure on finances. The share of households with a specific smart home budget climbed from 44 per cent to 71 per cent over two years. Among those households, the average budget increased by more than AUD $1,300 to above AUD $3,500 in 2026.

Growth was concentrated among households budgeting more than AUD $1,000, reflecting the higher cost of energy storage, home upgrades and related installations. At the same time, 58 per cent of households said they felt more financially stretched than a year earlier, while 69 per cent were trying to increase income or reduce spending.

Saving money remained the main reason for smart home spending, followed by energy management. That focus has lifted demand for products tied to electricity generation, storage and control.

About two in five Australian homes already have rooftop solar, and battery uptake accelerated in the 12 months after the Federal Government launched its Cheaper Home Batteries Program. More than a third of households without solar or battery systems said they were interested in installing them.

Telsyte expects batteries to account for their largest share of smart home revenue in 2026 before easing to just over half by 2029 under the revised rebate structure. The study noted that the stronger rebate now applies to the first 14kWh of capacity, with lower support above that level.

EV link

The rise in solar and battery systems is also feeding into the electric vehicle market. Telsyte estimates about half a million EVs will be on Australian roads by the end of 2026, creating additional demand for EV wall chargers and software to manage home energy use.

Among consumers who do not yet own an EV, 37 per cent said they would still consider buying one even if fuel prices returned to normal levels. The study also found that 61 per cent of solar or battery adopters were interested in an energy management service, while 63 per cent of battery owners were interested in virtual power plants.

"Many solar-powered homes are taking the next step with batteries and EVs," said Foad Fadaghi, managing director, Telsyte.

Installation has also become a major part of the market. Revenue from smart home installation services rose 87 per cent in 2025, led by battery projects. Meanwhile, 79 per cent of Australians looking to make their homes smarter said they placed high value on advice from professional installers.

Changing demand

As connected devices become more common, consumer focus is shifting towards specific rooms and uses. Entertainment areas, outdoor living spaces and home offices were the spaces households most wanted to improve with smart home products. Connected devices are also being used for wellness, monitoring and comfort in older households.

The smart lifestyle segment is forecast to record the fastest growth through 2029, with a compound annual growth rate of 21 per cent. Telsyte linked that outlook to rising sales of smart appliances and household robots such as robotic vacuums, window cleaners and lawn mowers.

Smart security adoption continued to rise, especially for cameras and video doorbells, but revenue in that category fell 8 per cent in 2025 because of stronger price competition and demand for basic monitoring products. Suppliers are likely to seek differentiation through more advanced artificial intelligence features, including recognition of people, pets and objects, as well as local storage options aimed at addressing privacy concerns.

Interoperability gap

The study found persistent problems in getting devices to work together. Among smart home adopters, 67 per cent said they had difficulty making products interoperate, while only one in seven Australians were aware of Matter, the cross-brand standard designed to improve compatibility.

Smartphones remained the main control point for smart homes, used by 58 per cent of users, followed by smart TVs at 33 per cent, tablets at 16 per cent, and smart speakers and displays at 14 per cent. Revenue from smart hubs, including smart speakers, fell 32 per cent in 2025 as more devices connected directly through Wi-Fi and mobile apps.

Even so, consumer attitudes towards artificial intelligence in the home appear to be warming. Telsyte found 70 per cent of Australians believe AI could manage a smart home better than they can, up from 58 per cent in 2024. However, more than three in five said they would be uncomfortable if AI made decisions in their home without their prior knowledge.

"Households will hand AI the keys when privacy and security safeguards are in place," said Alvin Lee, senior analyst, Telsyte.