Aussies build second biggest houses on the planet

Australia's new homes are shrinking.

Remarkably, Australians continue to build some of the biggest houses on the planet. Yet, an increasing proportion of them - especially in Sydney, Melbourne and Brisbane - also want smaller homes like apartments, semi-detached homes and town houses.

As a result, the average home size continues to fall – now at 20-year lows, according to new data commissioned by CommSec from the government statistician.

Generation Y, Millennials, couples and small families want to live closer to work, cafes, restaurants, shopping and airports and are giving up living space for better proximity to the desirable amenities, the data reveals.

The figures show the average new home is 189.8 square metres, down 2.7 per cent over the past year and the smallest since 1997.

More apartments

According to CommSec economist, Craig James, the smaller home size reflects the increased building of apartments.

“Seven years ago, around 27 per cent of homes built were apartments. Today, apartments account for almost half (47 per cent) of all homes built.

“The shift to smaller apartments may mean that more of them need to be built to house the growing population compared with free-standing houses.

“And this point emphasises that when considering issues like undersupply and over-supply, a range of issues need to be considered.

While homes may have shrunk in size, Australians are no slouches when it comes to building some of the world's most massive free-standing houses, according to the Australian Bureau of Statistics.

Fewer McMansions

Houses built over the past year are still far bigger than those built in the 1980s and 1990s.

In fact, houses are around 11 per cent larger than 20 years ago and over 30 per cent bigger than 30 years ago," the data revealed.

“There are still McMansions being built, but there are fewer of them," noted James.

Still, while the average new house has grown slightly over the past two years, it isn’t reaching new highs having peaked around six years ago, according to the ABS.

The average new house built in 2016/17 was 233.3 square metres, the biggest in four years.

Mammouth houses in US

While global statistics on home size are difficult to come by, latest data indicates that Australian homes are the second biggest in the world, behind the US, according to the data.

On average, US houses are still bigger by around 5 per cent. US homes - houses and apartments - are 8 per cent bigger.

Further, the last global survey conducted by the United Nations indicates that the average floor area of new homes built in US, Australia and New Zealand were far larger than in other European economies.

“Clearly the changes in housing demand and supply, and the differences across the country, have major implications for builders, developers, investors, building material companies, financiers and all levels of Government," argued James.

“Five years ago, economists were baffled by the failure of home building to lift to the level of assumed underlying demand. However, the “apparent paradox” was explained by structural change such as demographics and higher use of Australia’s large homes.

"Now household size is falling again, and at the same time that the average home size is also falling. And if current trends continue, then clearly more homes can be built without resulting in over-supply conditions.

“In short, supply would merely be responding to stronger demand."

James' point? It is not just population, but demographics and choice of accommodation driving demand.

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