Bigger apartments over the past year

C o m m S e c A n n u a l H o m e S i z e R e p o r t

 T h e a v e r a g e s i z e o f n e w a p a r t m e n t s h a s l i f t e d o v e r

 B u t t h e j u r y i s o u t o n w h e t h e r t h e t r e n d w i l l b e m a i n t a i n e d

 A u s t r a l i a a n d t h e U S c o n t i n u e t o b u i l d s o m e o f t h e b i g g e s t h o m e s ( a p a r t m e n t s & h o u s e s ) i n t h e w o r l d

 B u t t h e a v e r a g e s i z e o f n e w h o m e s ( h o u s e s & a p a r t m e n t s ) f e l l i n b o t h A u s t r a l i a a n d t h e U S o v e r t h e p a s t y e a r

 N e w h o u s e s i n t h e A C T a r e o n a v e r a g e t h e b i g

Overall findings

 CommSec commissioned the Australian Bureau of Statistics (ABS) to supply data on the average floor area of new homes built in Australia.

 After posting the biggest increase in 11 years during 2019/20, homes built nationally over 2020/21 were – on average – slightly smaller than the previous year. Apartments were bigger while detached houses were slightly smaller.

 The Covid-driven desire for extra living space may been reflected in bigger apartments being built. The average new apartment completed in 2020/21 was at an 11-year high of 138.3m², up 0.4 per cent over the year. By comparison, the average free-standing house completed in 2020/21 was 229.3m², down 2.9 per cent from 7-year highs. And the average new home (houses and apartments) completed over 2020/21 was 195.8 square metres, down 0.4 per cent from the 6-year high set in 2019/20.

 Queensland was notable for building bigger detached houses and apartments over 2020/21. In fact the average new home in Queensland (houses and apartments) was up 5.5 per cent to an 8-year high of 205.8 m².

 In 2020/21 the biggest new houses were built in the ACT (259.3m²); the biggest apartments were in Victoria (156.8m²); and the biggest overall homes (houses and apartments) were in Western Australia (214.8 m²).

 Data also confirmed that Australia and the US continue to build the biggest homes in the world. But importantly in both countries the average size of new homes completed fell over the past year.

 In the US, the average new home completed was 2,066 square feet or 192m², around 2 per cent smaller than the average Australian home. But the measuring methodology differs slightly between the two countries. However, based on the available survey evidence, new homes being built in Australia and the US are still notably bigger than in other countries.

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Economic Insights. Bigger Australian apartments over the past year

Analysis of findings

 Back in 2009/10 Australians were building the biggest homes that they had ever built. The size of the average home peaked at 218.6m², 46 per cent bigger than in the mid-1980s. Interestingly the size of US homes peaked around the same time (in fact, two years earlier).

 After falling from 2010 to 2012, home size in both the US and Australia broadly trended sideways in the past eight years. And while homes haven’t been getting much bigger in recent years, they are still notably larger than those built by previous generations.

 The average Australian free-standing house is 24 per cent bigger than the house built 30 years ago with new homes (includes apartments) 14 per cent bigger.

 The size of the average house in both Australia and the US has been falling from highs for various reasons: the increased focus on sustainability; desire for low-maintenance homes; smaller lot sizes; fewer people per home; affordability; a desire for proximity to inner cities; and energy costs.

 But after hitting 22-year lows in 2018, home size lifted before since stabilising. The average home size lifted 3.4 per cent in 2019/20 – the biggest increase in 23 years – before consolidating (down just 0.4 per cent) in 2020/21.

 While quarterly data is more volatile, national home size hit a 7-year high of 201m² in June quarter 2020 and stood at 200m² in the December quarter. Apartment size and house size also spiked higher in the June quarter, especially apartments. Apartment size spiked to 146 m² in June quarter 2020 – a record high in the 10 years of available quarterly records and a result on par with the high set 17 years ago for financial year records.

 Covid-19 may have influenced home size, although it is still relatively early days in the construction cycle. The experience with Covid-19 has certainly caused more families to look for bigger homes and caused others to add extra rooms to existing homes. More Aussies want to achieve a situation where family members are able to live, work and relax at home. No doubt, builders and architects have been quick to respond to the new demands by families.

 Prior to Covid-19, a higher proportion of Aussies had elected to live in apartments rather than detached houses. At the same time the average size of an apartment hit record lows in 2017/18. The conclusion that many Aussies appear to have reached is that apartments became too small to be truly comfortable and practical.

 New trends such as butler’s pantries, mud rooms (storage for boots, coats and wet clothing) and home theatres have also given more families justification to build bigger homes.

 There have been shifting trends in the sizes and styles of homes over the past decade and Covid-19 has been throwing another element into the mix. The big question is whether Aussies continue to embrace working from home,

Economic Insights. Bigger Australian apartments over the past year opting to move away from apartments in, or near the CBD, in preference for a larger home in a regional or suburban ‘lifestyle’ area. Or it may be just a case that bigger apartments will be sought – either close to capital cities or in the suburbs.

Definitions: the average Australian new dwelling or home

 The Australian Bureau of Statistics (ABS) compiles the data on the average size of a new dwelling.

 The ABS defines the average floor area of a new dwelling as:

 “The floor area of a building is defined as the quantity of useable space within the dwelling (including attachments) at its completion. This figure is measured in meters squared (m²) as reported by the respondent at the final stage of construction. The boundary of the recorded floor area of a dwelling is delineated by the external perimeter of the dwelling's exterior walls. This excludes non-enclosed structures attached outside the floor area boundary such as verandahs and carports. The floor area of apartments is the total floor area of the building (including common areas and hallways) divided by the number of dwellings contained within the building.”

 “This means that:

 unenclosed carports are excluded from the calculation of floor area;

 garages, as long as they are enclosed, would be included in the floor area stated (even if unattached to the house);

 the floor area of granny flats is included in the calculation of floor area, but it would represent an additional dwelling on the site (included in the denominator of the average floor area calculation).

 There are practical limitations related to this, as councils are unlikely to strictly police the inclusions/exclusions of floor area reported by applicants.”

 The ABS provided data on houses and “other dwellings”.

 “Houses – defined as detached buildings used for long term residential purposes, consisting of only one dwelling unit and are not a result of alterations or additions to a pre-existing building.

 ‘Other dwellings’ include townhouses and flats, units and apartments.

 'Townhouses' - defined as semi-detached row or terrace houses attached in some structural way to one or more dwellings, with their own private grounds and no separate dwelling above or below.

 'Flats, units or apartments' - defined as blocks of dwellings that don't have their own private grounds and usually share a common entrance, foyer or stairwell.”