Australians are building the largest homes in the world

Australians are building the largest units, townhouses and houses in the world, new research reveals, bucking a six-year trend of shrinking homes, and overtaking the United States.

The homes built in Australia over the last financial year were bigger than those in any other country, according to CommSec’s Home Size report, research commissioned by Commonwealth Bank and undertaken by the Australian Bureau of Statistics (ABS).

Houses experienced their biggest increase in 11 years. The average house built during the last financial year jumped 3 per cent to 236 square metres.

Meanwhile, apartments reached a high not seen in a decade. The average apartment’s floor space lifted 6 per cent to 137 square metres.

“Before last year, Aussie home buyers had been building progressively smaller houses on average,” Craig Jams said, chief economist at CommSec.

“So while Aussies built bigger homes over the past year, the big question is whether the decade-long downtrend in home size has ended.”

Will people build bigger? During COVID-19, probably.

Housing sizes have been tumbling over the last 11 years for a variety of reasons, including fewer people living in them, a want for low-maintenance homes, smaller lot sizes, a focus on sustainability, affordability, energy costs and proximity to the cities.

But the change in lifestyle brought about by the COVID-19 pandemic has led to Australians seeking larger homes.

“Government-imposed lockdowns in response to the COVID-19 virus have prompted more Aussies to re-assess their housing needs,” Mr James said.

“With more time spent at home for both leisure and work, some Aussies are looking for bigger homes. Others are coming to the belief that the layout of their home needs changing.”

The Housing Industry Association (HIA) agrees people are building larger properties, but they believe the shifting trend is owed to the growing popularity of larger apartments.

“It’s not as remarkable as it first looks,” Tim Reardon said, chief economist at the HIA. “There’s a shift out of the small ends of homes into what is the larger end of apartments.”

The largest homes built in the last financial year were in the ACT, followed by Victoria, NSW and WA, while the smallest were built in Tasmania and the Northern Territory.

The size of homes is going up generally to add extra rooms, CommSec said, but some homes are adding home theatres, butler’s pantries, and mud rooms to store boots, coats and wet clothing.

“The trends in home size have enormous implications for retailers and builders,” Mr James said.

“It is also clear that a raft of government agencies and businesses, especially those that are reliant upon or housing-focussed, will need to be agile in monitoring the new housing trends.”

A pandemic, remote working and the suburbs

The popularity of remote working has led to people flocking to regional areas where land is more plentiful and affordable, and this migration is contributing to more resilient property prices.

Homes in capital cities fell 2.3 per cent on average in the seven months from March, analysts CoreLogic said, while regional homes went up in value 1.7 per cent.

“The newfound popularity of working from home is only one factor helping to support regional home prices,” Tim Lawless said, head of research at CoreLogic.

“More affordable price points, lower densities and lifestyle factors, are also under-pinning the relative strength across many regional areas of the country.”

But it’s unclear if the draw of larger houses in regional areas will become a permanent trend.

“It’s simply consumers making short term decisions to move to locations with more space,” Mr Reardon told RateCity.

“Eventually, … people will return when those (city) centres return to full activity. We’re expecting it’ll be relatively short lived.”

People are building in big numbers. Perhaps big homes too?

About half of the mortgages people committed to in September were for homes they had planned to build, according to ABS data.

The increase in homes being built has been attributed to the government’s HomeBuilder scheme, a $680 million initiative offering grants of $25,000 to eligible people spending from $150,000 to $750,000 renovating or building their home.

“Owner occupier housing loan commitments are at historically high levels, consistent with low interest rates and government incentives,” Amanda Seneviratne said, head of finance and wealth at the ABS.

“For example, it is likely that the Homebuilder grant is contributing to increased demand for construction loans.”

Homebuilder is not the only government scheme encouraging people to build new homes.

Applications for the government’s revised first home loan deposit scheme opened last week, offering 10,000 eligible people the chance to secure a mortgage with a 5 per cent deposit and no LMI if they’re buying a new or newly built home.

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