Home Size

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<p><span style="font-size: 12.16px;">EXPERT OBSERVER</span></p>
<p><span style="font-size: 12.16px;">Seven years ago, Aussies were building the biggest detached (free-standing) houses in the world. But in the period since, Aussie home buyers have embraced apartments as well as smaller houses on smaller lot sizes. </span></p>
<p><span style="font-size: 12.16px;">There are still McMansions being built, but there are fewer of them. Now houses being built in the US are the biggest in the world, around 5 per cent bigger than in Australia.</span></p>
<p>Only 21 per cent of ACT dwellings in 2018/19 were houses. But those houses averaged 251 square metres – the biggest in Australia. Victorian houses built last year were 246m² - the biggest in seven years.</p>
<p><span style="font-size: 12.16px;">The average house built in Tasmania in 2018/19 was the smallest in 23 years and at 21-year lows in Queensland. On average, NSW apartments built in 2018/19 were the smallest in 20 years of records.</span></p>
<p><span style="font-size: 12.16px;">Houses built in Australia over the past year are still far bigger than those built in the 1980s and 1990s. In fact houses are around 5 per cent bigger than 20 years ago and 25 per cent bigger than 30 years ago.</span></p>
<p><span style="font-size: 12.16px;">And that is important when doing comparisons of house prices over time. Not only are houses far bigger than those built in the 1980s and before, but the standard of fit-out today is far superior with higher quality kitchens, bathrooms, floor coverings and inclusions like air-conditioners.</span></p>
<p><span style="font-size: 12.16px;">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.</span></p>
<p><span style="font-size: 12.16px;">The average new house built in the US last calendar year (latest available) was 240.4 square metres (m²), around 5 per cent bigger than in Australia. And US homes (houses and apartments) averaged 201.8m² in 2018, around 6 per cent bigger than in Australia.</span></p>
<p><span style="font-size: 12.16px;">In New Zealand the average home built in 2018/19 was 164.4m², around 13 per cent smaller than in Australia.</span></p>
<p><span style="font-size: 12.16px;">The UK Office of National Statistics and United Nations indicate that the average floor area of new homes built in the US, Australia and New Zealand were far larger than in European economies.</span></p>
<p><span style="font-size: 12.16px;">In recent years a key trend in Australia has been the increasing number of apartments being built. Eight years ago around 27 per cent of homes built were apartments. Today, apartments account for almost half (41 per cent) of all homes built.</span></p>
<p><span style="font-size: 12.16px;">And the increased number of apartments being built has served to reduce the size of the average new home built in Australia. In fact the average home was 186.8m² in 2017/18, the lowest level in 22 years. And the average home size rose by just 1.2 per cent from these lows in the past year.</span></p>
<p><span style="font-size: 12.16px;">Through the 2004-2010 period, the average apartment was around 140m². Today it is closer to 125-130m².</span></p>
<p><span style="font-size: 12.16px;">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. Clearly, when considering issues like under-supply and over-supply, a range of issues need to be considered.</span></p>
<p><span style="font-size: 12.16px;">An increasing number of home buyers and renters prefer to live closer to offices, restaurants and recreational facilities in cities and towns. And given the limited supply of land, increased building of apartments and townhouses is necessary to satisfy demand.</span></p>
<p><span style="font-size: 12.16px;">Federal, state and local governments are also embracing the trend to urban consolidation, representing a more efficient utilisation of social and economic infrastructure such as roads, schools, public transport and hospitals.</span></p>
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<p><strong><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/11/8/Home%20Sizes.jpg" alt=""></strong></p>
<p><strong>What do the figures show?</strong></p>
<p><em>Australia &amp; US home completions</em></p>
<p>CommSec commissioned the Australian Bureau of Statistics to supply data on the average size of new homes built in Australia.</p>
<p>The data supplied relates to the average size of new homes built – houses, apartments and the average size of all homes. The ABS also indicates the proportion of homes built at the stated “average floor area”.</p>
<p>The United States Census Bureau provides both median and average estimates of new homes built and also supplies similar floor area data on new homes sold.</p>
<p>In 2018/19, the average size of a new house built in Australia was 228.8 square metres (m²), down from 231.8m² in 2017/18 and the smallest result in 17 years (since 221.2m² in 2001/02).</p>
<p>In the US, the average size of a new single-family house built in 2018 (latest estimate) was 2,588 square feet or 240.4m², down from a record 249.6m² in 2015. Australian houses were last bigger than US houses in 2011/12.</p>
<p>The average US home (houses and apartments) was 201.8m² in 2018.</p>
<p>In 2018/19 the average floor area of a new apartment in Australia (unit, townhouse, villa etc.) was 128.8m², up from 124.8m² in 2017/18 but 10 per cent below the high of 143.4m² in 2004/05.</p>
<p><em>States &amp; territories</em></p>
<p>The ACT is building the biggest houses in Australia. In 2018/19 the average floor area of a house built in the ACT was 250.8m², ahead of Victoria (246.0m²), Western Australia (225.3m²), and Queensland (223.0m² – a 21-year low).</p>
<p>The smallest new houses built were in Tasmania (178.5m² – a 23-year low).</p>
<p>By contrast, in 2018/19 the biggest apartments could be found in Tasmania (159.3m²) followed by Western Australia (155.8m²). The next biggest apartments were built in Victoria (147.5m²) and South Australia (139.3m²)</p>
<p>The smallest new apartments can be found in the ACT (102m²) and NSW (114m² - a 20-year low).</p>
<p>Of all homes built in 2018/19, the average floor area was biggest in Victoria (212.5m²), then Western Australia (212.3m²). In Western Australia over 75 per cent of homes built were free-standing houses, and in Victoria houses were 56 per cent of the total. By comparison, only around 43 per cent of homes built in NSW were free-standing or detached houses in 2018/19 and only 21 per cent of ACT homes.</p>
<p><strong>Home size peaks, more apartments, occupancy falls again</strong></p>
<p>Since the first Census was conducted in 1911, and up to 2006, the number of persons per dwelling consistently fell. In 1911 there was an average of 4.5 people in every home. But by 2006 this ratio had almost halved to around 2.4 people in every home. Not only were more homes being built but other factors like families with fewer children, more divorces and fewer marriages taking place had resulted in smaller families.</p>
<p>And as noted above, homes had been getting bigger until a few years ago. Apart from floor area, another way of looking at home size is the number of bedrooms. In the 2016 Census almost a third of homes had four or more bedrooms whereas 20 years ago the ratio was one in every six homes.</p>
<p>Census figures are only produced every five years. But fortunately demographic estimates are produced each quarter and they provide a guide to current trends in dwelling occupancy.</p>
<p>From 2006 to 2013, the number of people per dwelling rose. At face value, the modest increase in average household size may not seem significant. But it was the first increase in household size – and as a consequence, the average number of people in Australian homes – in at least a century.</p>
<p>Children were staying home longer with their parents – no doubt the cost of homes and rising rents being key influences. With the ageing population, more generations were choosing to stick together in the one dwelling – a trend that is a consequence of the increased size and quality of homes. New migrants also chose to stay with family or friends. And given the increased preference to attend universities and colleges, Generation Y was forced to share accommodation and save longer to buy a home.</p>
<p>According to quarterly ABS data, since 2014 the number of people per dwelling has been falling. Lower interest rates and the increased supply of cheaper apartments and townhouses (compared with free-standing houses) have prompted older couples to down-size. And more Generation Y / Millennials have been moving out of home and renting or taking ownership of accommodation more appropriate to their needs.</p>
<p>In part, the decline in household size explains some of the lift in home building. Higher population growth – especially in NSW, Victoria and the ACT – also explains the lift in home building. The question is whether household size continues to fall over the next few years or whether higher home prices act to stall demand, again prompting greater co-habitation of dwellings.</p>
<p>Free-standing houses now account for just over half of all new homes built with high-rise apartments and townhouses most in demand.</p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>Australians continue to build some of the biggest houses in the world. But an increasing proportion of Australians – especially in Sydney and Canberra – also want smaller homes like apartments, semi-detached homes and townhouses. As a result, the average home size has been falling over the past decade.</p>
<p>Generation Y, Millennials, ‘down-sizers’ and small families want to live closer to work, cafes, restaurants, shopping and airports and have been giving up living space for better proximity to the desirable amenities.</p>
<p>So urban consolidation continues. Older free-standing houses are making way for apartments. Building completions hit record highs in the year to March 2017, and have hovered near the highs in the period since. New council approvals to build homes have eased substantially from highs but there is still a substantial amount of work to be done.</p>
<p>It is important to note that there are major differences in house size across Australia. In 2018/19 only 21 per cent of ACT dwellings completed were houses, but those houses were the biggest in the nation and the biggest for the ACT in 11 years. Victoria built the second biggest houses in the nation and the biggest for the state in seven years. By contrast the average new free-standing house built in NSW was 10 per cent smaller than Victoria.</p>
<p>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. With the average number of people in homes falling and population rising, there is on-going need for a greater number of smaller homes to be built.</p>
<p><strong><em>CRAIG JAMES </em></strong><em>is the Chief Economist at CommSec</em></p>
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Australia's houses are shrinking, smallest in 17 years: CommSec's Craig James

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<p>The average floor size of an Australian home (houses and apartments) has fallen to a 20-year low, though latest data indicates that Australian homes are the second biggest in the world, behind the US.</p>
<p>Data commissioned by CommSec from the Australian Bureau of Statistics, shows the average new home is 189.8 square metres, down 2.7 per cent over the past year and the smallest since 1997.</p>
<p>The smaller home size can be attributed in a major way to the increased apartment construction, CommSec said in the report.</p>
<p>Although free-standing houses are still bigger. </p>
<p>In fact, the average new house built in 2016/17 was 233.3 square metres, the biggest in four years and more than 11 per cent bigger than 20 years ago. </p>
<p>The average house built today is over 30 per cent bigger than 30 years ago (the 1986/87 financial year).</p>
<p>On average, US houses are still bigger by around 5 per cent. And US homes (houses and apartments) are 8 per cent bigger.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/11/17/NewHomesBuilt.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/11/17/NewHomesBuilt.png" alt=""></p>
<p>Victorians are building the biggest houses in Australia, ahead of Western Australia and NSW. But the average size of houses built in South Australia in 2016/17 was the biggest in the state’s history.</p>
<p>In fact, the size of the average new house has grown slightly over the past two years. </p>
<p>House sizes are important when comparing prices over time, the CommSec report says. </p>
<p>“Not only are houses far bigger than those built in the 1980s and before, but the standard of fit-out today is far superior with quality kitchens, bathrooms, floor coverings and inclusions like air-conditioners,” it said.</p>
<p>Compared to US, Australian homes are the second biggest in the world.</p>
<p>The average new house built in the US last calendar year (latest available) was 245 sqm, around 5 per cent bigger than in Australia. And US homes (houses and apartments) averaged 204 sqm in 2016, around 8 per cent bigger than in Australia.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/11/17/AvgHomeSize.png" target="_blank">Click to enlarge</a></p>
<p> <img src="https://www.urban.com.au/images/2017/11/17/AvgHomeSize.png" alt=""></p>
<p>Neighbouring New Zealand is not far behind, with the average home built in 2016/17 (data on houses isn’t available) being 178.3 sqm, around 6 per cent smaller than in Australia.</p>
<p>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.</p>
<p>In recent years a key trend in Australia has been the rise in construction of apartments, which now make up nearly half of all homes built unlike seven years ago when only around 27 per cent of homes built were apartments. </p>
<p>The increase in the number of apartments being built has reduced the size of the average home in Australia. </p>
<p>In fact the average home was 189.8 sqm in 2016/17, the lowest level in 20 years and down 2.7 per cent on a year ago.</p>
<p>Through the 2004-2009 period, the average apartment was around 140 sqm. Today, it is closer to 130 sqm.</p>
<p>“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 under-supply and over-supply, a range of issues need to be considered,” says the report.</p>
<p>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 increased utilisation of Australia’s large homes.</p>
<p>Now household size is falling again, and at the same time that the average home size is also falling. If current trends continue, more homes can be built without resulting in over-supply conditions. In short, supply would merely be responding to stronger demand. </p>
<p>“The key point being that it is not just population, but demographics and choice of accommodation driving demand,” says the report.</p>
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Australian home size hits 20-year low: CommSec report

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<div class="column">GUEST OBSERVER</div>
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<div class="column">Compared with 20 or 30 years ago, Australians could be regarded as building ‘McMansions’.</div>
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<div class="column">Still, houses are not continuing to get bigger, having peaked around 4-5 years ago. The same can’t be said for the US. US houses built in 2015 were the biggest on record, and arguably the biggest in the world.<br><br>Unfortunately there is no central reference source for the size of homes across the globe. Still, when we last looked at this issue in 2013, Australia and the US were building the biggest homes in the developed world. And now it seems to be clear that the US has pushed ahead in building even bigger homes while the size of new homes built in Australia have plateaued in recent years.</div>
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<div class="column">European homes are far smaller than in the US or Australia, NZ homes are 7 percent smaller than Australia, and latest data suggests that Canadian homes are around 10 percent smaller than in Australia.</div>
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<br>The average new house built in the US last calendar year (latest available) was almost 250 square metres, around 10 per cent bigger than in Australia. The results were actually greeted with some consternation in the US in June when they were released. Particularly the fact that homes are getting bigger, but not lot sizes (“The Shrinking of the American Lawn”).</div>
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<br>Australian houses are still big, but they don’t seem to be getting bigger on average. Still, the average new house is 10 per cent bigger than 20 years ago and around 30 percent bigger than 30 years ago.</div>
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<br>And this is a point not picked up in discussion of home prices. Not only are homes far bigger than those built in the 1980s and before, but the standard of fit-out today is far superior with quality kitchens, bathrooms, floor coverings and inclusions like air- conditioners.</div>
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<br>Australians have also been shifting to smaller apartments. In 2015/16 more than 200,000 homes were built, up 37 percent in the space of three years. But less than 60 percent of homes built were free-standing houses, down from the long-term average of 70 percent.</div>
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<br>Through the latter period of the ‘noughties’, the average apartment was around 140m2. Today it is closer to 130m2.</div>
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<br>The shift to smaller apartments may mean that more of them need to be built to house the growing population than if bigger houses were being built instead.</div>
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<div class="column">In short, when considering issues like under-supply and over-supply, a range of issues need to be considered.</div>
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<br>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 increased utilisation of Australia’s large homes. Now household size is falling together with the size of homes being built. And if household size falls again to around two people per dwelling, then clearly more homes can be built without over-supply developing. </div>
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<div class="column">What do the figures show?</div>
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<div class="column">Australia &amp; US home completions</div>
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<div class="column">CommSec commissioned the Australian Bureau of Statistics to supply data on the average size of new homes built in Australia. The last time that the ABS supplied information on average home size was in November 2013 for the 2012/13 year.</div>
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<br>The data supplied relates to the average size of new homes built – houses, apartments and the total of all homes. The ABS also indicates the proportion of homes built at the stated “average floor area”.</div>
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<br>The United States Census Bureau provides both median and average estimates of new homes built and also supplies similar floor area data on new homes sold.</div>
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<div class="column">In 2015/16, the average size of a new house built in Australia was 231 square metres (m2), up from 229.4m2 in 2014/15 but down from the record high of 247.7m2 in 2008/09.</div>
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<div class="column">In the US, the average size of new single-family houses built in 2015 (latest estimate) was 2,687 square feet or 249.6 square metres. At the recent peak in 2011/12, the average house built in Australia had stood at 244.9m2, just over 5 per cent above the US average of 232.7m2.</div>
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<div class="column">In 2015/16 the average floor area of a new apartment in Australia (unit, townhouse, villa etc.) was 131.3m2, up from 129.0m2 in 2014/15 but almost 9 percent below the high of 143.7m2 in 2004/05.</div>
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<div class="column">States &amp; territories </div>
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<div class="column">Victorians are building the biggest houses in Australia. In 2015/16 the average floor area of houses built in Victoria was 241.1m2, ahead of Queensland (237.7m2), NSW (227.4m2) and Western Australia (227.0m2).</div>
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<div class="column">The smallest new houses built were in the ACT (180.8m2) and Tasmania (188.1m2).</div>
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<div class="column">In 2015/26 the biggest apartments could be found in the Northern Territory (179.3m2). However, the data may be distorted by the small number of completions in the year (857).</div>
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<div class="column">Of the states, Victoria built the biggest apartments in 2015/16 with the average floor area at 134.7m2, ahead of NSW (132.4m2) and South Australia (131.0m2).</div>
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<div class="column">Of all homes built in 2015/16, the average floor area was biggest in Western Australia (205m2), then Victoria (203.3m2). In Western Australia over 76 per cent of homes built were free-standing houses, compared with around 59 per cent in Victoria.</div>
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<div class="column">Home size peaks, more apartments, occupancy falls again</div>
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<div class="column">Since the first Census was conducted in 1911, the number of persons per dwelling has consistently fallen. In 1911 there was an average of 4.5 people in every home. But by 2006 this ratio had almost halved to around 2.4 people in every home. Not only have more homes been built over time but other factors like fewer children and divorces have resulted in smaller families.</div>
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<div class="column">And as noted above, homes had been getting bigger until a few years ago. Apart from floor area, another way of looking at home size is the number of bedrooms. In the 2006 Census around one in every 3.5 homes had four or more bedrooms whereas 20 years ago the ratio was one in every six homes.</div>
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<div class="column">Unfortunately Census figures are only produced every five years. Fortunately demographic estimates are produced each quarter and they provide a guide to current trends in dwelling occupancy.</div>
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<div class="column">From 2006 to 2013, the number of people per dwelling rose. At face value, the modest increase in average household size may not seem significant. But it was the first increase in household size – and as a consequence, the average number of people in Australian homes – in at least a century.</div>
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<div class="column">Children were staying home longer with their parents – no doubt the cost of homes and rising rents being key influences. With the ageing population, more generations were choosing to stick together in the one dwelling – a trend that is a consequence of the increased size and quality of homes. New migrants also chose to stay with family or friends. And given the increased preference to attend universities and colleges, Generation Y was forced to share accommodation and save longer to buy a home.</div>
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<div class="column">But since 2014 the number of people per dwelling has again been falling. Lower interest rates and increased supply of apartments have prompted older couples to down-size. Generation Y began to move out of home and take ownership of accommodation more appropriate to their needs. In part, this explains some of the lift in home building. The question is whether household size continues to fall or whether higher home prices stalls demand, prompting greater co-habitation of dwellings.</div>
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<div class="column">What is the importance of the economic data?</div>
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<div class="column">The Australian Bureau of Statistics (ABS) collects data on new home completions. Where the data is made available, estimates of the average flor area of the com homes can be calculated. Changes in the size of homes has implications for builders, developers and retailers of home appliances. If bigger homes are built, this may result in fewer homes being built to absorb increases in population.</div>
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<div class="column">What are the implications for interest rates and investors?</div>
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<div class="column">Australians continue to build big homes. But there has been a clear shift in the past few years. Australians are re- assessing their needs. Couples and small families are considering apartments. Down-sizers are also moving closer to the city or sea-changing or tree-changing. There is less need for big 4-5 bedroom homes and it is clear across suburbia that consolidation continues to occur – homes being demolished and replaced with apartments, town houses and villas.</div>
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<div class="column">While one theme is ‘ageing Australia’, there is also the re-assessment of housing needs by Generation Y and Millennials. Many in Sydney, Melbourne and Brisbane are seeking to live closer to work, cafes, restaurants, shopping and airports and are giving up living space for better proximity to the desirable amenities.</div>
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<div class="column">Last year Victoria built a record number of homes. Similarly NSW built the greatest number of homes since the Sydney Olympics. But rental vacancy rates haven’t soared, rather gravitated to more balanced outcomes. Clearly investors need to pay greater attention to changes in household size to work out what is going on.</div>
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<div class="column">At present there is significant discussion about the potential for some housing markets to be over-supplied with new homes. But while home building is at record highs, demand for homes has increased in line with rising population, especially in Sydney and Melbourne. And housing needs have changed. Younger buyers – and indeed some older ‘downsizers’ – are looking to live in smaller homes. And the market is responding. Clearly the issue of over-supply is complicated. But the changes in housing demand and supply have major implications for builders, developers, investors, building material companies, financiers and all levels of Government. </div>
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<div class="column"><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em></div>
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<em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em>
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