Why Australia’s Average Home Size is Decreasing

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Killian Plastow| The New Daily| 19 November 2018


Homes built in Australia last year were smaller than they have been in more than two decades, and it’s part of a broader trend in which our houses are getting smaller.

Buyers at both ends of the market are choosing location and amenities over house and land size, a choice that is being strongly encouraged by all tiers of government.

The average size of a new home fell to 186.3 square metres in 2017-18, bringing home size for new dwellings to a 22-year low, according to research compiled by Commonwealth Bank stockbroking arm CommSec.

This shift is driven by a number of underlying factors, according to CommSec senior analyst Ryan Felsman, and most of these stem from the nation’s changing demographics – particularly our ageing population.

As the population ages, more and more Australians are downsizing to townhouses, and it’s a trend the government is eager to spur along through incentives such as tax concessions for retirees who place the proceeds of downsizing their home into their superannuation.

“We’ve got an ageing population, so we’ve got a natural downsizing taking place,” Mr Felsman said.

“What we’re seeing is the baby boomers downsizing to townhouses, in particular, and we’ve seen those townhouse building approvals at 20-year highs.”

At the same time, younger Australians are “less enthused by the white-picket fence” than previous generations, preferring to live in smaller apartments nearer to cities, beaches or other amenities that appeal to their lifestyles.

This trend is similarly encouraged by government incentives, such as grants and concessions for first-home buyers.

The result is an increased demand for smaller properties.

WA leads for big homes

While the national average for home sizes fell 1.6 per cent in 2017-18, the average size of a new home in Western Australia actually grew by 1 per cent, up to 211.5 square metres.

Queensland and Victoria similarly bucked the downward trend, with average home sizes in the Sunshine state climbing an immense 5.8 per cent to 190.5 square metres, while Victoria saw a 1.5 per cent jump to 201.8 square metres.

However, Mr Felsman noted this leaderboard changes when looking at the size of new houses rather than including apartments, with Victoria and ACT taking the lead with average new house sizes of 244.8 square metres and 242.3 square metres respectively.

“That’s not a great surprise,” Mr Felsman said.

“The two states with the strongest economic growth are the ones with the biggest houses being built, and also have among the strongest population growth.

“I think that’s a theme that stands out in this research.”

Australian homes still bigger than most

Despite the reduction in home size, Australians still enjoy the second largest homes in the world, sitting behind the US’s 202-square-metre average and well ahead of New Zealand’s 172.1 square metres in third.

Australia still boasts some of the largest homes in the world despite the recent reduction.

“Part of the attraction of living here from overseas is the fact you have your own piece of land and there’s potentially not an environment where you’re on top of each other like you may have in Asia and Europe,” Mr Felsman said.

While it’s likely that homes in Australia will continue to get smaller, Mr Felsman said it was hard to say if they will ever shrink to the size of those found in Asia and Europe.

“I think it’s part of the Australian psyche and culture to live in a house and certainly historically if you look at what’s gone on, Australians still have that desire to have the quarter-acre block,” he said.

What has changed, however, is Australians’ appetite for homes with big kitchens and lavish bathrooms, Mr Felsman said. Most buyers now prefer high-tech appliances and amenities to the spaciousness of previous generations.

Mr Felsman’s comments reflect the findings of an HSBC report from October that found Australian home buyers are increasingly looking for modern, “Scandinavian” style homes over pools or spare bedrooms.

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