ACT building Australia's biggest houses, and that's a problem

The ACT housing market suffers from a dearth of smaller, stand-alone houses within the reach of average homebuyers as it builds the biggest houses in Australia, a new report shows.

The CommSec Home Size Trends Report says Australia is again building the biggest houses in the world, and the ACT is at the top of the national pile.

It says the average floor area of an ACT house built in 2019-20 was 256.3 square metres; ahead of Victoria (250.3 sqm); NSW (235 sqm); and Western Australia (232.5 sqm).

But only 23 per cent of all homes built in the ACT were free-standing or detached houses in 2019-20.

Despite the apartment boom in the ACT, it is ‘house and land’ that is in high demand, as are townhouses, semi-detached dwellings or duplexes with separate title.

Apartment sizes are also growing again, with those in the ACT built in 2019-20 averaging 143 sqm, above the national average of 136.8 sqm.

But when all homes are taken into account the average floor size in the ACT slips back to 178.3 sqm, only ahead of Tasmania (174.8 sqm) and NSW (171.8 sqm).

While lot sizes have shrunk, the houses in the ACT have not, occupying more of the site. Older stand-alone houses may be smaller in size but are often on bigger blocks, and the land is at a premium.

It adds up to an affordability conundrum, acknowledged by Chief Minister Andrew Barr recently when grappling with the infill versus greenfield development question.

”We build big, expensive houses in Canberra and that is a factor in affordability,” he said.

He did not expect the price of land to fall substantially but suggested there were ways of getting more affordable blocks to market.

He implied that the housing industry would have to start providing a greater range of products, including smaller more affordable homes on smaller blocks, but he said infill did not mean there would not be new suburbs.

The planning system would need to play its role, something the upcoming planning review will tackle.

The CommSec report says that 2019-20 reversed a seven-year trend for smaller houses and apartments across Australia driven by the increased focus on sustainability; desire for low-maintenance homes; smaller lot sizes; fewer people per home; affordability; a desire for proximity to inner cities; and energy costs.

”Aussies had embraced apartments as well as smaller houses on smaller lot sizes. In fact the size of the average house built last year (2018-19) was the smallest in 17 years,” CommSec says.

But over the past year there appears to have been a perception that homes had shrunk a little too much, it says.

”The recent experience with COVID-19 has certainly caused more families to look for bigger homes and caused others to add extra rooms to existing homes,” the report says.

”The recent trends to butler’s pantries, mudrooms (storage for boots, coats and wet clothing) and home theatres have given more families justification to build bigger homes.”

CommSec says houses built in Australia over the past year are still far bigger than those built in the 1980s and 1990s, with houses around 6 per cent bigger than 20 years ago and 27 per cent bigger than 30 years ago.

“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,” it 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,” it says.

Canberra falls into this regional mix, and within the ACT this could also drive even more demand for the traditional suburban house on a block or something like it.