There has been a shift in building trends in Australia — the average size of free-standing houses has shrunk while that of apartments has expanded, according to the latest study from CommSec and Australian Bureau of Statistics. 

The average size of new houses built in the 2018-2019 financial year was 228.8 square metres, down 1.3% from the record last year. This has been the smallest recorded average house size since 2001.

On the other hand, the size of an average Australian apartment has grown by 3.2% to 128.8 square metres.

"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," the study said. 

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However, houses built over the past year were still substantially bigger than those built in the 1980s and 1990s. The study said this fact is crucial when looking at the price trend of houses.

"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," it said.

Bigger apartments

The increasing number of apartments being built has been a key trend in Australia in recent years. Apartments accounted for 41% of all homes built over the past year, significantly higher than the 27% eight years ago. 

"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 study said.

Furthermore, the growing number of homebuyers and renters who prefer to live closer to cities where land is limited has boosted the construction of apartments and townhouses.

Also read: Why apartments trump houses as investment

Urban consolidation

State and federal governments are embracing the trend to urban consolidation, according to the study. While Australians continue to build some of the biggest houses in the world, an increasing proportion of people in cities like Sydney and Canberra now prefer smaller homes like apartments, semi-detached homes, and townhouses.

"Generation Y, millennials, downsizers, 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," the study said. 

As urban consolidation continues, older free-standing houses are making way for apartments, pushing building completions to hit record-highs as approvals to build homes moderated substantially.

"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 an on-going need for a greater number of smaller homes to be built," the study said.