Interpac Business and Migration Solutions Melbourne Australia

(Aug.15)

ONE of the nation's biggest developers has said the size of new homes has peaked and that affordability issues would mark the end of the so-called McMansion and the growth of smaller, more efficient homes.

While the average new home grew 10 per cent to a world record 215 square metres in the decade to 2009, the managing director of Stockland, Matthew Quinn, said homes were shrinking and the trend was locked in.

Announcing Stockland's results for the financial year, Mr Quinn said by cutting up to 70 square metres from the size of a new home, buyers could save $40,000-$60,000 a house, making them affordable.

Going, going, gone ... "homes are shrinking and the trend is locked in," says Matthew Quinn. Photo: Andrew Quilty

Already the average size of a four-bedroom house has dropped 20 per cent since 2007 while three-bedroom houses have shrunk by 26 per cent over the same period as living areas, media rooms and hallways disappeared in more compact designs.

While one in 10 new homes in Stockland developments had five bedrooms in 2007, only 2 per cent of new homes this year were as big and the percentage of three-bedroom homes had leapt from 21 per cent to 34 per cent in the same period.

Stockland's chief executive for residential communities, Mark Hunter, said smaller three-bedroom, two-bathroom homes were ''the new sweet spot'' in the market as customers realised the benefits of smaller houses in the same way they adjusted to saving water during the drought.

With power prices increasing, people wanted more efficient homes and were happy to sacrifice extra bedrooms, rumpus and media rooms and make do with a single open-plan living and dining area opening onto an outdoor area, Mr Hunter said.

He had no doubt the era of the ever-growing McMansions was over and he expected home sizes to shrink as fast as they grew in the first decade of this century.

Mr Quinn said the move to smaller houses on greenfield sites on the city fringes was driven by a lack of housing affordability, with households under financial pressure with the benefits of the mining boom failing to trickle down.

''While affordability is being addressed by governments and more land is becoming available, we will look, as a long-term plan, to reduce our house sizes and that will be embedded into our system,'' he said.

The days of building increasingly large shopping centres were also coming to an end as retailers, especially in the clothing sector, struggled to remain profitable.

''Online retailing is also making us look at building and developing smaller centres to provide a better value for money for shoppers,'' he said.

Stephen Albin, the chief executive of the Urban Development Institute of Australia, which represents many new-home builders, said the trend to shrinking new home sizes was only just beginning.

''I think there's a massive shift going on and we are at the front end of it,'' he said.

''People are starting to realise a five-bedroom house has other costs, from the amount of leisure time you lose maintaining it, to heating and cooling, and you are going to start to find we are at the front end of that shift … the McMansion's days are numbered, just look overseas and see what's happening.''

Andrew Tice, a senior research officer at the University of NSW's City Futures Centre, agreed that house sizes were on their way down.

''Stockland's views echo what we see through conversations we have with other developers about how to offer family houses on the fringe but make it more affordable,'' he said.

Source from Theage.com.au