Is bigger better? Not necessarily when it comes to house size.

With our wide open expanses and love of the great outdoors, it’s not particularly surprising that new data reveals Australians are still building the largest homes in the world.

Even though, until recently, the number of people living in each house has been shrinking, it seems we have an innate attachment to traditionally sprawling dwellings, the likes of which we saw gain huge favour late last century.

But is all of this changing?

What’s happening to dwelling size?

It seems like the size of our average dwelling is shrinking….

Australian Bureau of Statistics data commissioned by CommSec, indicates that the average floor area of new homes, including apartments and detached houses, was recorded at 214.1m2 in the nine months to March 2011, with freestanding houses being constructed at an average size of 243.6m2.

Interestingly, there is a notable shift occurring around the apartment market in Australia though, as an increasing number of developers recognise the growing popularity of smaller, low maintenance apartment living in our inner cities and as such, have been downsizing their medium to high density projects of late.

ABS data shows new apartment builds averaged 133.7m2 for the nine months to March, representing the smallest figure in decades.

And even though we have outdone the US in the “bigger home is better” stakes by around 10 per cent, the average home size in Australia has begun to track sideways over the past few years, after peaking at 248m2 in 2008-09.

And our household size is growing.

Additionally, ABS data shows that in 2003-04 the number of people living in detached homes sat at 2.53, however latest figures indicate this has risen to 2.66.

These changes to the size and use of our homes are clearly a reflection of the various factors helping to shape our property markets at present, including;

  • our growing population – the majority of whom want to live close to employment and existing infrastructure and amenity concentrated largely in and around our inner cities.
  • more young people marrying later than their parents and putting off having children in favour of building a career.
  • a rapidly growing ageing population looking to downsize.
  • an increasing number of Gen Y’s choosing to remain in the family home longer, or move into shared accommodation, due to the ongoing affordability issues around renting and buying a home.
  • more Gen Y’s choosing lifestyle over security and opting to travel, etc rather than buy a new home.

Our changing demographics

If we examine these factors in relation to the latest data about average house and apartment sizes, it is clear to see the correlation between our changing priorities and how much space we want and need from a home.

Young Gen-Y apartment buyers and retired baby boomers are looking for lifestyle and affordability over size. These priorities mean smaller, inner suburban apartments often ticks all the right boxes with their low maintenance design, relatively attainable pricing and most importantly, desirable location close to employment and amenities.

Then of course our growing population means we need more accommodation and given that we have very little land on which to build outwards due to availability of suitably zoned land with suitable infrastructure, the only way to go is up. That means a larger number of smaller individual apartments need to be captured in new medium to high density developments on smaller parcels of land.

Which brings us to the final point that goes a long way toward explaining why Australia’s average household size has again started to grow after so many years of shrinking – more parents find themselves waiting longer for the family nest to empty while their Gen Y offspring struggle to afford a place of their own.

For property investors and developers, the message couldn’t be clearer.

In summary:

Australian perceptions of what a home means and how we choose to use the space in which we live are changing. No longer is it about the huge McMansion with the sprawling backyard for the kids to play in.

Instead it’s about affordability, practicality and lifestyle.

Those of us who seek to create long term wealth from property need to recognise that;

  • the size of our average household is unlikely to grow much more given the higher incidence of one and two people households in Australia.
  • more baby boomers will be looking to downsize and move closer to health, public transport and entertainment infrastructure without having to pay through the nose for a new home.
  • we need more accommodation for our growing population and with governments trying to contain urban sprawl, the most likely compromise is to build up rather than out, with greater medium to high density developments in the future.
  • there is a growing prevalence of people opting to stay put and renovate their existing home to better use the space they already have, rather than undergo a costly new home build. In turn, supply constraints will continue and help to underpin property prices in the long term.

So the message?

Quite simply… good things come in small packages with regard to the future of Australian homes, and importantly, there is no reason our inner suburban property values won’t continue to outperform over the coming decades.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit

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