After years of preferring smaller homes, Australians are once again building the world’s largest houses, beating their US counterparts.

During the last financial year, the average size of a newly constructed house in the country is 235.8sqm, up almost 3% year-on-year and the biggest rise in 11 years, according to the latest home size report commissioned by Commonwealth Securities Limited (CommSec) and undertaken by the Australian Bureau of Statistics (ABS).

The average size of newly built apartments has also increased, hitting a decade-high of 136.8sqm, a 6% jump from the previous year.

Overall, the average size of new homes built during the 2019-20 financial year is 195.8sqm, a year-on-year rise of 3%, marking a six-year record.

“Before last year, Aussie home buyers had been building progressively smaller houses on average,” says Craig James said, chief economist at CommSec, the online stockbroking arm of the Commonwealth Bank of Australia. “So, while Aussies built bigger homes over the past year, the big question is whether the decade-long downtrend in home size has ended.”

ACT houses, Victorian units are the largest

The biggest newly built houses in Australia can be found in the Australian Capital Territory, boasting an average floor area of 256.3sqm. Victorian houses are next with an average size of 250.3sqm, followed by those in New South Wales at 235sqm, and Western Australia at 232.5sqm.

The smallest houses built last financial year are in Tasmania, where the average area is 179sqm.

As for “other dwellings,” which include townhouses, flats, and apartments, the largest are in Victoria, where average floor space is 155sqm. Dwellings in Western Australia are the second largest at 150.5sqm, followed by South Australia’s 149.8sqm, and Northern Territory’s 145.3sqm.

Units in NSW have an average floor space of 121.3sqm, which is the smallest in the country.

Overall, Western Australia boasts the biggest newly constructed homes this past financial year, with floor spaces measuring on average 218.5sqm. Homes in Victoria come next with an average area of 217sqm.

Is the COVID-19 pandemic making homes bigger?

James says he has seen many Australians “embrace” smaller homes over the past several years, with the average size of new houses hitting a 17-year low in the 2018-19 financial year. Apartments have also been getting smaller, with the average floor area shrinking to a 22-year low in 2017-18 before slightly increasing the following year.

He attributes the downtrend to a range of factors – including an increased focus on sustainability, a desire for low-maintenance homes, shrinking lot sizes, fewer people per home, affordability issues, and a desire to live near inner cities.

However, the COVID-19 pandemic has prompted many families to re-evaluate their housing needs, he says.

“There have been shifting trends in the sizes and styles of homes over the past decade and COVID-19 is throwing another element into the mix,” James says. “More Aussies could embrace working from home in a bigger way, opting to move away from apartments in, or near the CBD, in preference for a larger home in a regional or suburban ‘lifestyle’ area.”

He adds that the pandemic has shifted families’ preferences from smaller homes to those with larger spaces, pushing some to expand their existing residences by adding extra rooms.

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

“While on average there are still only around 2.5 people in the average home, homebuilders regularly include four bedrooms on the architects’ plans, together with a master ensuite, walk-in robe, butler’s pantry, home theatre room, study nook, mud room, and alfresco dining,” he says.

What are the implications to investors?

James says the shifting preference to larger homes has “enormous implications” for retailers and homebuilders.

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

James says among the pandemic’s most significant effects that investors should pay attention to is the sudden transition to remote work.

“If more Aussies decide to work from home, this has implications for central business districts (CBDs) of capital cities, including office and retail space usage, cafes and restaurants, services such as hairdressers, and public transport services,” he says. “If more Aussies opt for sea-change, tree-change, or green-change, this has implications for home prices, home supply, and social and economic infrastructure demands (roads, schools, hospitals) in outer-suburbs and regional areas.”