Why Aussies are downsizing the dream

Australians love big houses, but research suggests that consumers are moving away from the great Aussie dream of the freestanding house on the large block and embracing higher-density living.

Approvals for units, townhouses and semi-detached homes increased their share of the total from 31 percent five years ago to 38 percent in the year to October 2011, according to a Bankwest report. The trend to more compact living is a national one, with two-thirds of 204 local areas across Australia seeing an increase in the share of medium density housing over the past five years.

Vittoria Shortt, retail chief executive of Bankwest, said Australians are choosing different types of housing to suit our modern lifestyle; factoring in affordability, a tight rental market and lifestyle choices.

“It’s not surprising to see a trend towards higher-density living,” she said.

“Although the majority of households in Australia still live in detached houses, access to employment, transport and amenities are driving growth in medium density housing.”

The average dwelling size in Australia has fallen from a peak of 218.9 square metres in 2008-09 to 214.2 square metres in late 2011, according to Australian Bureau of Statistics research commissioned by CommSec.

But while the average free-standing home was still 243.6 square metres, new apartments are the smallest average size in a decade at just 133.7 square metres.

Why we’re aiming smaller

Tougher financial times and demographics changes are among the biggest drivers towards higher-density living.  A Citibank survey recently found that the rising cost of living is pushing more homeowners to the brink, with around one in 10 Australians forced to downsize their home last year to reduce living expenses. Around two-thirds of respondents believe homeownership is out of reach for their children, while the majority said more government support is needed to help first home buyers into the market.

Craig James, chief economist at CommSec, explains it: “Back in 1985 the average home in Australia was around 150 square metres. By 1995 this had risen to 175 square metres and another decade later home size had risen to 210 square metres. That is an amazing 40 percent increase in the size of the Australian home in the space of 20 years”.

“At some point Australians were going to stop adding extra bedrooms and living rooms to their houses and apartments, and that point seems to have arrived.”

Compare home loans in Australia