Apartment Appetite Up as McMansions Fall Out of Favour

Although Australia is still building some of the world’s largest houses, the size of free-standing houses have reached a 17-year low, with implications for developers and builders, reveals a new report.

Aussies were building the largest free-standing houses in the world seven years ago according to data commissioned by CommSec from the Australian Bureau of Statistics, but home buyers have since embraced apartments as well as smaller houses on smaller lot sizes.

“There are still McMansions being built, but there are fewer of them,” CommSec chief economist Craig James said.

“Now houses being built in the US are the biggest in the world, around 5 per cent bigger than in Australia.”

The average new house built in 2018-2019 was 228.8sq m, this reflects a decrease of 1.3 per cent on a year ago to the smallest house size since 2001-2002 period.

Downsizing trends

But a notable recent trend is the increasing number of apartments being built in Australia.

Eight years ago around 27 per cent of homes built were apartments.

Today, apartments make up almost half (41 per cent) of all Australian homes built.

“Free-standing houses now account for just over half of all new homes built, with high-rise apartments and townhouses most in demand,” James said.

CommSec notes that the increased number of apartments being built has served to reduce the size of the average new home built in Australia.

“The average home was 186.8sq m in 2017-2018, 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.

“Through the 2004-2010 period, the average apartment was around 140 square metres. Today it’s closer to around 125-130 square metres.

“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,” the report notes.

The appetite for McMansions?

Australia is still building some of the biggest houses in the world, but on average, US houses are still larger by around 5 per cent.

The ACT took the crown for building the largest houses in Australia in 2018-2019, ahead of Victoria, Western Australia and Queensland.

The average house in New South Wales is 10 per cent smaller than Victoria.

On average, NSW apartments built in 2018-2019 were the smallest in 20 years of records.

While houses built in Tasmania and Queensland were at 23 and 21-year lows respectively.