April 24, 2020

Are we building bigger and bigger homes?

Analysis of building consents and census data

In 2006, new residential houses averaged 191 square metres in size. The average size of new builds increased to 200 square metres in 2010.

Kiwis are starting to downsize

In 2006, new residential houses averaged 191 square metres in size. The average size of new builds increased to 200 square metres in 2010. However, for the last ten years there has been a steady decrease. For the latest year 2019, the average size of a new residential house in New Zealand was just 158 square metres.  This move to smaller new builds is evident in both our largest housing market Auckland as well as smaller rural regions, like Tasman. This decline is evident in the figure below, which shows the annual average size of new residential consents in square metres for New Zealand, Auckland and Tasman.


The figure clearly shows that new residential builds in Auckland have gone from a high of 219 square metres in 2010, to 153 square metres in 2019. While new builds in Tasman decline from a peak of 208 square metres in 2009, to 167 square metres in 2019. 
Between 2006 and 2013 (190 square metres or bigger, nationally) there was a move to build larger homes. With the increased size came an increase in the number of rooms, including bedrooms and other living rooms. For example new housing in Aotea, Wellington, built through this period were three to four bedroom houses with multiple living rooms. 

The decrease in size in average floor areas between 2013 and 2019 most likely can be attributed to increased numbers of infill housing developments in larger urban areas. These builds are often characterised by two and three bedrooms townhouses.  These townhouses are often built two to three storeys tall so that multiple townhouses can be fitted into smaller sections of land. 

Residential building consent data only provides information on new builds flowing into the total stock of houses in New Zealand. For information on the entire stock of houses within New Zealand, we need to use census dwelling data.

Unfortunately census data does not provide information on the size of dwellings, but rather provides information on the number of rooms and bedrooms. For the census, Statistics New Zealand asks one person from the household to fill in the number of bedrooms; lounges, living rooms or family rooms; dining rooms; kitchens; conservatories you can sit in; and studies, studios, hobby rooms.  The number of bathrooms is not included in this count.  For the purposes of the number of rooms, any open plan rooms count as separate rooms, for example a lounge dining room area, is counted as one lounge, and one dining room.
To understand the impact of new builds on the stock of houses, we use our best proxy in the census data for size, the number of rooms. Therefore our analysis moves to examining census data on the number of rooms, and number of bedrooms by household tenure and region.

So what is the current position of the stock of residential housing in New Zealand?

According to the 2006 Census, the average number of rooms for an occupied private house in New Zealand was 6.2.  According to the 2013 Census, the average number of rooms increased to 6.3.  Finally by the 2018 Census, the average number of rooms increased to 6.6 rooms. Also, the overall percentage share of houses with eight or more rooms increased from 22 percent in 2006, to 28 percent in 2018.

While the increase in the average number of rooms between 2013 and 2018 does seem at odds with the decline in size shown in residential consents data, it is likely that trends in new builds will take time to flow into and affect the average number of rooms across the entire stock of houses. Therefore, we would expect to see the decline in the average number of rooms reflected in the 2023 Census.

Does it matter if you own or rent your home?

Reviewing the 2018 Census data on average number of bedrooms per house by household tenure, shows that there is a clear difference across the country between houses that are owner-occupied and those that are rented. Rented houses have on average 2.7 bedrooms, while owner-occupied houses have on average 3.4 bedrooms. This is a difference of almost an entire bedroom.

The question is, does this smaller average bedroom count reflect the houses that renters want to rent? Or are these the only houses available to renters? Unfortunately census data on the number of usual residents per household by household tenure has not yet been released. Once released it will provide a better picture, if the supply of rentals meet the needs.

As shown in the figure below there is a clear difference between the average number of bedrooms in private rentals compared to private owner-occupied houses in every region in New Zealand.

Source: Statistics New Zealand, Census 2018

Also shown in the figure above, in 2018 the Auckland region owner-occupied houses had the most bedrooms with 3.5 on average, while the region with the largest average of bedrooms in rental houses was Otago region with 2.8. At the other end of the spectrum, the West Coast region had the lowest average number of bedrooms with 3.1 for owner-occupied houses, while the Wellington region had the lowest average number of bedrooms with 2.6 for rental houses.
This data indicates that if we project the difference between owner-occupied houses and rental houses, in the number of bedrooms to the number of rooms, we could expect owner-occupied houses to have on average 1.4 rooms more than a rented house across the country, in 2018.

Further work will be needed to fully understand the factors that influence the average size of new dwelling and the average size of New Zealand’s housing stock.