Australia's housing sector currently has no consistent or clearly defined role in the nation's carbon-abatement schemes, despite the housing sector being a major national emitter of greenhouse gases. This effectively removes a significant incentive for innovation in green building, distributed and renewable energy generation, and energy-efficiency initiatives, locking in poor performance of dwellings and wasteful behaviour by households. Pathways to a low-carbon housing future are identified via a new class of hybrid building (energy-efficient envelope, energy-efficient plug-in appliances and local energy generation linked to a national grid). Modelling is used to demonstrate the routes that a spectrum of detached housing, ranging from ‘carbon clunkers’ to new ‘project’ homes, can take to achieve zero-carbon status. Hybrid buildings can achieve zero-carbon status through combined lower energy consumption and local energy generation, achieving reductions in emissions of 11 tonnes of CO2-e per dwelling per year, compared with new 5 Star energy-rated ‘project’ homes (the current building standard) which generate on average 9.5 tonnes of CO2-e emissions/year. Key transitions for Australia are identified in hot water heating, space heating and cooling, built-in appliances and plug-in appliances that can significantly reduce domestic carbon footprints. A portfolio of technical and policy options is explored for decarbonizing the housing sector.