Why are new apartments so small?

Australian homes are the smallest they've been in 20 years, according to the new CommSec Home Size Trends Report.

The report, which uses data especially commissioned by CommSec from the Australian Bureau of Statistics, shows the average floor size of an Australian home, including both houses and apartments, was 189.8sqm the 2017 financial year, down 2.7 per cent from the previous year, and the smallest size since 1997.

The smaller overall average home size reflects the growing tendency for Australians to live in apartments, and the massive boom in apartment-building - approximately half of all new buildings are apartments at present, according to the report. By comparison, only seven years ago, only 27 per cent of new homes were apartments.

And the apartments being built are getting smaller

The average floor area of a new apartment/townhouse/villa in Australia was 128.3sqm, down from 131.3sqm the previous year, and 10.5 per cent lower than the high of 143.4sqm reached in the 2005 financial year.

Between 2004 and 2009, the average apartment size was around 140sqm.

But don't be fooled into thinking Australians are becoming more content with more modest, energy efficient and environmentally friendly homes - we are still building some of the largest freestanding houses in the world.

In the 2017 financial year, the average size of a new house in Australia was 233.3sqm, up from 230.5sqm the previous year.

Australian houses are today more than 30 per cent larger than they were 30 years ago and are the second-largest new houses in the world. Only the US is building larger homes, approximately 5 per cent larger than Australian houses.

However, house size has declined from the peak reached six years ago, according to the report. "There are still McMansions being built, but there are fewer of them," the report states.

The report also notes that not only are houses larger today than they were 30 years ago, but they have more expensive fitouts, including top-notch kitchens, bathrooms, and floor coverings, and include other new items such as air-conditioners.
 

Victorians are building the biggest houses in Australia, with an average floor space of 242.8sqm in the 2017 financial year, while Tasmania is building the smallest new houses, at 195.5sqm.

In the 2017 financial year, the biggest apartments were built in the Northern Territory, at 154.5sqm, though only a relatively small number of apartments - 1,173 - were built.

What does the data mean?

Between 2006 to 2013, the number of people per dwelling rose in Australia. The increase in household size was the first recorded in at least a century.

Children were staying at home longer with their parents, and more generations were choosing to live together in one home. New migrants often choose to live with family or friends, and Generation Y was living in share accommodation for longer, according to the CommSec Home Size Trends Report.

But ABS data shows that since 2014, the number of people per dwelling has resumed falling. Lower interest rates and the increased supply of lower-cost apartments has allowed older couples to down-size and enabled more Generation Y to move out of home into their own accommodation.

The question is, will household size continues to fall over the next few years?

Should there be more debate about the types of houses people want to live in? I for one, very rarely see a four-bedroom apartment that I could comfortably live in with my three children.

As the report says, in the end "demographics and choice" of accommodation drive demand.

Click here to read the CommSec Home Size Trends Report.

Read more about new home construction:

The sale of new homes continues to decline

Developers are turning to larger apartments

Melbourne's best performing real estate: two-bedroom houses

Whether out of convenience, preference or price, more and more Australians are taking up apartment living.

The 2016 census snapshot showed that over the past 25 years, the number of people living in apartments has increased by 78 per cent, occupying more than 1,214,372 dwellings.

But as more Australians choose to live in apartments, their size has dramatically shrunk.

On average, the floor area of new apartments over the past 15 years shrunk 17.5 per cent, from 131 square metres in 2003-04 to 108 square metres in 2017-18, according to the Australian Bureau of Statistics (ABS).

Concerns over the size of apartments, their quality and access to amenities led the New South Wales government in 2014 to implement requirements in an attempt to clamp down on so-called “dog boxes”.

Dog boxes, also known as micro-apartments, are dwellings that have 50 square metres or less of floor space, and they have been increasing in number for years.

Other states are yet to follow NSW. In 2016, Victoria mandated that apartment standards regulate the minimum amount of floor space in a bedroom, but not across the entire premises.

Most banks won’t provide finance for apartments smaller than 50 square metres, meaning investors primarily buy micro-apartments, says BIS Oxford Economics senior manager Angie Zigomanis.

“At the end of the day, they’re more likely to be purchased by investors than owner-occupiers because they’re more likely to be in an affordable price point and they’ll get a better rental yield,” he told The New Daily.

In the next 10 years, there will be an increased demand for medium- density housing, including townhouses, large units and apartments with at least three bedrooms, BIS Oxford Economics analysis shows.

“A lot of the apartments have been built to target investors. It’s a product that’s acceptable for renters but not necessarily to live in long term,” he said.

But despite these concerns, some developers are championing smaller dwelling spaces.

When size doesn’t matter

Investment firm MicroNest specialises in the creation of communal apartments – small-roomed dwellings with large communal areas. It is currently working on two projects in Sydney.

“We’re trying to create a community where people are going to feel connected and remove loneliness,” founder Dejan Radanovic told The New Daily.

The apartments, which can be rented for up to 10 years, offer between 23 and 25 square metres of floor space.

“The beauty is, it gives a different appeal. They’re self-contained studios. Something similar to going to a hotel – you have a kitchenette, a bathroom, a sleeping area, but there’s a lot of action happening in communal spaces.”

Clare Cousins, president of the Australian Institute of Architects, says size shouldn’t matter when it comes to apartments.

“Size is not the most important factor in the liveability of a unit,” she told The New Daily.

“A well-designed and [well] planned apartment with appropriate access to natural light, ventilation and storage can create a better lifestyle than a larger, poorly designed home.

“It is important there are a range of options for people in all living circumstances and budgets, so a range of apartment sizes is important.”

Proponents of not mandating the minimum size say that smaller apartments offer affordable dwelling spaces within inner cities.

But policy adviser at the Tenants Union of NSW, Leo Patterson Ross, says the concern is about developers passing on the savings to the consumer.

“Developers reduce the floor size, but there’s such a great demand they still end up charging a bunch for people to live in,” he told The New Daily.

“Some places in NSW are getting past the legislation by claiming to be boarding houses [when] they’re just micro-apartments.

“People are accepting them because it’s in the middle of the city, but what we worry about is that people are getting stuck in smaller places. It’s not really a choice.”

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