Size matters when it comes to Australian housing

Not only does Australia have some of the most expensive housing in the world, but we can also lay claim to having the largest homes in the world.

In the United States, which traditionally possessed the largest homes in the world, the size of new homes is shrinking. However back home, the size of the average new home has increased about 10 percent over the last decade. At the same time the number of persons living in each household is rising as we change the way we live.

Here’s why…the cost of housing and the cost of moving house is rising, children are living at home longer and more people are opting for shared accommodation. We are making greater use of what we’ve got.

However, this raises the question- is the trend to better utilization of existing homes temporary or a more permanent development.

After all, if the average household size continues to rise, this could reduce the requirement to build more homes. It could also determine the type of property that would be in demand in the future an important consideration for property investors.

While a number of industry bodies have been suggesting that there is a housing shortage in Australia, that is, we aren’t building enough homes to accommodate our growing population, other commentators would suggest that there is some doubt about this.

While there is a shortage of good properties in some locations, overall we have an oversupply of properties in around Australia. There are just too many properties for sale – at the current rate of sale it would take 6 or 7 months to sell all the properties for sale around Australia.

And things could get worse as we are building too many properties in some of Melbourne’s outer suburbs and a there is glut of apartments looming in the Melbourne and Brisbane CBD’s.

What’s happening to household size?

The average size of Australian households has been creeping up from 2.51 to 2.56 and while this small increase might initially seem unremarkable, it represents the first increase in household size in at least a century and indicates a subtle change in how we are choosing to use the space in which we live.

While we still have quite a way to go before we end up back where we were in the early 1900’s, when there was an average of 4.5 people in every home, it appears we have indeed turned a corner since 2006 when the average household consisted of just 2.4 people.

So what has caused this transition?

Our expanding population, the rising cost of living and house prices are three underlying reasons. Then there is the influence of our ageing population, with retirees being less likely to up sticks and move from the family home than their younger counterparts.

Additionally, a lot of adult children who would have once flown the family nest are now opting to live with mum and dad longer. Many potential first home buyers have been pushed out of the property market due to affordability issues.

Add to that the fact that a large portion of Gen Y’s are keen to live in and around our major cities, where rental prices are more expensive, and this has forced them into shared accommodation scenarios.

Another factor is the flat property markets over the last few years which has discouraged people moving house. Instead they end up renovating or extending their existing home.

What does this mean for property investors?

Should we start parking our money in larger residential dwellings?

The simple answer is no – while these may make great homes, they’re not necessarily “investment grade” properties.

In fact the need for apartment style accommodation will continue to grow. With most of Australia’s employment opportunities and existing major infrastructure located in and around our major city centers, more local and state governments are pushing for higher density development rather than urban expansion and let’s face it, smaller usually means more affordable.

Currently the vast majority of apartments consist of one or two bedrooms, one living area and little or no communal or private outdoor amenity. But maybe this won’t suit all the new families who will be living in apartments in the future as we swap our backyards for balconies and courtyards.

There is no escaping the fact that we can’t continue to build large detached homes that provide affordable living for our growing population. As our population grows and real estate prices and rental values continue to soar, apartments will be an increasingly important form of primary accommodation of the future.

Maybe the answer is to rethink our concept of how an apartment should look and feel with more, larger, 3 bed apartments on the bottom floors of our new high rise developments providing accommodation that could provide safe play areas for children, such as internal courtyards.

For property investors and developers, this means now is the time to plan ahead and take action. When you next think about buying an apartment investment or building a new apartment complex, keep in mind the tenants who might be living there and the potential home owners who might purchase your property in the future.


Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.


Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.

Michael Yardney


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 his opinions are regularly featured in the media. Visit

'Size matters when it comes to Australian housing' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.