Sections

Services

Information

UK United Kingdom

Want to cut your costs of living? Start with a smaller home

How much would you give up to have a home that didn’t cost you a cent in energy bills? Would you sacrifice that spare bedroom that’s full of junk and hardly gets used? Or the additional bathroom? What…

How much is that cluttered spare room really costing you? Flickr/raider3_anime

How much would you give up to have a home that didn’t cost you a cent in energy bills? Would you sacrifice that spare bedroom that’s full of junk and hardly gets used? Or the additional bathroom? What about the second TV room?

As the credit card bills start to arrive after Christmas, many of us often resolve at the start of a new year to manage our money a bit better. And if you’re looking for somewhere to start, there’s no place like home.

Whether you’re in the market for a brand new home, or thinking about expanding the home you’re already in, our research has shown just how much size matters when it comes to Australians' cost of living.

Expensive spare rooms

On average, Australian homes are among the biggest in the world. And our houses increasingly have more and more rooms.

The Australian Bureau of Statistics has found that 78% of Australian houses have more bedrooms than are needed to accommodate the occupants, based on an internationally-applied Canadian standard. That number is even higher among home owners, rather than renters (see the ABS graph below).

Boundless rooms to spare: Australians who own or are buying their homes tend to have more spare room than renters. Australian Bureau of Statistics, August 2013

For new home buyers, slightly decreasing the size of their home - the equivalent of losing that spare bedroom - would be enough to pay for improved environmental and energy performance of the house.

This would slash energy bills, improve cost of living and dramatically reducing the household’s environmental impact.

A small loss for a big gain

Drawing on our recent research, an average size (250 metre square) new 6-star home in Victoria now costs $195,000, excluding land, and has $1700 of annual energy running costs.

Yet we found that if you reduce the size of that average home by 5-10% to 225-235m2, the $20,000 you would save on upfront costs would be enough to offset most, if not all, of the costs for energy efficiency improvements and renewable energy (such as solar photovoltaic panels) to mean it had no net energy needs.

In talking about a home with zero net energy needs, we mean that one that is producing enough energy on-site to meet its ongoing operating needs, and resulting in no ongoing energy costs for the household.

To achieve zero net energy performance, there is significant upfront cost, which typically means that it is seen as “unaffordable” for the average family. However, there is a simple way of covering these upfront costs: build smaller.

Comparing the total costs of traditional housing (solid lines) compared to zero energy housing (dashed lines) for various house sizes. Note that for clarity the 7 star and 9 star scenarios have been left out of this graph. Authors

Smaller floor space would not necessarily mean the house would feel smaller. We found an example of a sustainable design and construction company in Canberra which ran a workshop to ask potential clients what they wanted in a house, within the limits of building an environmentally sustainable and affordable 200m2 house. They found that as long as they got the key areas right, such as a nice entertaining area connected to the outside, they could trim some floor space from other rooms and even remove some additional rooms all together.

Building now for the future

There has been a steady increase in the average floor area of new homes between the mid-1980s and 2012-13.

The size of new houses increased from 162.4m² to 241.1m² (a rise of 48.5%), while new other residential dwellings (such as units or townhouses) increased from 99.2m² to 133.9m² (a 35.0% increase).

While the most recent ABS figures show that house size has declined slightly since a peak in 2008-09, the dominant trend of the past 30 years has been that bigger was better.

And we need to remember that once built, housing can last many decades, locking in future occupants to a higher cost of living.

There are a number of direct and indirect approaches which could be introduced or driven by the government to encourage smaller housing.

For example, the government could mandate that homes should not overshadow their neighbours and block out their access to sunlight, which would affect their ability to generate power from solar panels.

There are also more subtle indirect measures that could be applied. For instance, banks could rethink their financing models for home loans to take into account the cost of living in a home (such as bigger energy bills for less energy-efficient homes) and homeowners' ability to repay those costs when weighing up someone’s capacity to pay off their mortgage.

But, unless the government takes action, ultimately it’s up to us as consumers to think about whether we’re happy to keep paying higher costs for bigger homes with rooms to spare. If not, you do have a choice.

With a huge population of baby boomers looking to downsize, and Gen Y’s preference for smaller, low-maintenance housing located near work and amenities, it’s just possible that higher quality, more sustainable smaller housing could become more common.

Articles also by These Authors

Sign in to Favourite

Join the conversation

40 Comments sorted by

  1. Geoff Sauer

    Alumni Relations Officer

    Can't agree more! Downsized 11 months ago from two storey 13 rooms and a pool to single storey, 3BR (one is now the tv room), and small garden. Added solar panels. Council rates, electricity, gas, water all much cheaper - steadily getting rid of the all accumulated goods and chattels we no longer use.

    report
    1. Jane Middlemist

      citizen

      In reply to Geoff Sauer

      How I would love to follow suit and move out of our house into something easy care and smaller and importantly, closer to public transport. Petrol just getting more expensive every minute! But my DH keeps saying next year. I'll just have to keep trying.

      report
    2. Trivess Moore

      Research Fellow at RMIT University

      In reply to Geoff Sauer

      Thanks for the comment Geoff. You raise a great point about the wider cost benefits which we have not flagged in this article. You could also add reduced maintenance costs to the list, which is a cost I don't think too many people think about when purchasing their houses.

      report
  2. Henry Verberne

    Once in the fossil fuel industry but now free to speak up

    I agree that house growth has become more of a liability than an asset. Our house, built in 1981, is 168 sq metres with four bedrooms and two bathrooms but we raised three children without any hardship. Since they left home we have renovated to improve both comfort and energy efficiency and it has been money well spent.

    But it seems many of us have been sold the "dream" of a room for this and for that, from "parent's retreat" to "home theatre", resulting in a house which is often costly to keep warm in winter and cool in summer.

    report
  3. Jane Somebody

    Underemployed

    I thought my house was too small until I realised that entire middle-class families in Europe lived in flats that were smaller than my house! The problem is not that the house is too small, but that I have too many things. Now whenever I see something that I might like to buy, I just tell myself it's just more clutter--taking this approach is a terrific way of saving money. But my house does have a fundamental problem, which is poor design, and this detracts from its livability in many small but persistently annoying ways.

    One factor that hasn't been mentioned, though, is noise: forget the separate media room, what I need is an insulated, soundproofed, vented/air-conditioned room where I can retreat/sleep when the neighbours decide its party time AGAIN. When are planners and architects going to take noise seriously?

    report
    1. Chris O'Neill

      Retired Way Before 70

      In reply to Jane Somebody

      "When are planners and architects going to take noise seriously?"

      Indeed. Noise is something council planners care very little, if at all, about.

      report
    2. Michelle Douglas

      logged in via email @gmail.com

      In reply to Chris O'Neill

      Read the article on Tony Abbott wanting to cut red tape.

      Council planners don't get to make their own laws. They would have zero chance of doing anything about noise reduction and in Victoria they would most likely end up in VCAT for trying to do so.

      The first thing our current liberal Victorian state government did was revise planning laws and drastically reduce the time planners have to asses developments. This is what Australians and Victorians voted for.

      report
  4. Mark Snashall

    Statistician

    I would be very interested to know if there is a difference between units and free standing houses in the summaries above (or even if that was considered by the ABS). My experience is that some unit blocks have different energy requirements due to the natural insulation of the other units - open windows and/or closed blinds are all we need to keep cool in summer.

    report
  5. Greg North

    Retired Engineer

    Whilst living in a smaller home is ideal where attainable and even a Caravan can become an extra living space and/or bedroom doubling as the holiday house, climate and location can have a lot to do with living costs too.
    Having a small house in Queensland, situated to get good breezes most times when it's hot, our house is airconditioned year around with open windows and doors just closed up some for a couple of colder weeks a year during winter.
    Plenty of greenery about also helps with the micro climate whereas any city dweller will feel the effects of the bricks, mortar and tar heat sink, not to mention vehicles even if it all seems normal.
    I'm off to Melbourne and beyond in a couple of days and rather dreading the thought of some of the trip.

    report
  6. Geoff Clark

    Senior Lecturer at University of Tasmania, School of Architecture and Design

    You don't have to be that bright...but you do need to be able to stop following the crowd, and that is the hard bit it seems - resale!

    Chickens and eggs to some degree, but the quarter acre block must take a significant degree of responsibility for this, not only because it enables massive houses, but because of what it does to transport and infrastructure costs, and these have a staggering effect on costs of living.

    The cheapest car in the country to run and own is the Hyundai Getz, at $130/week…

    Read more
    1. Michelle Douglas

      logged in via email @gmail.com

      In reply to Geoff Clark

      $130 a week is half the mortgage? What mortgage is that? An interest only mortgage subsidized by the government?

      We have a $200,000 mortgage, which is less than 60% valuation of the cheapest home you could buy in the Melbourne Metro Area (apart from student accommodation) and our repayments are about $500 per week with the interest alone being about $130.

      I wish we could report posts for being factually absurd!!!

      While I agree with the benefits of downsizing, it shouldn't be used as a means of taking the limelight away from real social issues. The cost of housing in Australia is absurd. To put into perspective how absurd: if we were to increase minimum wage to bring housing affordability back to where it was 30 years ago, minimum wage would need to be at least $100,00 per year.

      report
  7. Graeme Hanigan

    logged in via Facebook

    My wife and I have downsized from a 40sq 2 storey, 6 bedroom home to an 8sq 2 bedroom shack by the water and are loving it.

    We have installed 3kwh of solar panels, solar hot water with a gas boost and our running costs are a fraction of what they were.

    A big bonus is it takes 30 mins to clean the house from one end to the other.

    It's the best decision we have ever made and we did it after travelling to the UK and seeing how efficiently the average Brits use their homes.

    report
  8. John P Morgan

    Physics teacher (ret).

    A very sensible proposition and should be obvious.
    We are at 102 sq m but it is well distributed.
    The design and layout is consistent with the second law of thermodynamics and so is thermally comfortable.
    All energy requirements can be met from the solar on the roof.
    It would have been more of a challenge at the 'average' size of modern homes.

    report
    1. Trivess Moore

      Research Fellow at RMIT University

      In reply to John P Morgan

      Hi John,

      I would be interested in knowing if the additional challenge for the 'average' size house meant you went with the smaller house, or were you interested in a smaller house to begin with?

      report
    2. John P Morgan

      Physics teacher (ret).

      In reply to Trivess Moore

      G'day Trivess.
      The background thinking was that in the carbon constrained world coming up, building components costs would more closely reflect the energy embedded in them. It would thus be a lot more expensive to build a house and thus they would necessarily be smaller.
      We decided to adopt that rationale. A small house is easy to keep comfortable and we have been able to do that on radiant energy from the sun alone. The house has no heater or aircon. The mean daily temperature indoors follows the seasonal variations through the year (16 to 28).

      report
  9. Ryan Farquharson

    Research Officer

    This is all good an well, but can you please tell me who can build an 8-10 star zero gen house for around $1000/m2 in Adelaide???
    In the next few years I seriously want to build a modest, energy efficient house for two adults, two children and the occasional visitor, but everything I've seen is around $2000-$3000/m2.

    report
    1. Geoff Clark

      Senior Lecturer at University of Tasmania, School of Architecture and Design

      In reply to Ryan Farquharson

      Ryan, 2 things -

      Housing costs what housing costs and as you have indicated, a square metre rate is a reasonable estimator. Put simply, a 'house' cannot be built at $1000/sqm, but as the thread is implying, if you cut the house to 1/3 of the preliminary size, you will have $3000/sqm to spend, and it will be inherently more energy efficient.

      Outdoor spaces are CHEAP! Minimal containment, maximal living in 'place' - sun, air, rain, wind, trees, flowers. Outdoor spaces cannot consume energy, but they (plural) have to be designed to EXPLOIT prevailing conditions. The question is one of 'living' more than one of 'house'.

      Troppo are the gurus on this.

      report
    2. Greg North

      Retired Engineer

      In reply to Ryan Farquharson

      Why not have a look at all the different building construction methods that are feasible Ryan and then see if there is a design/building materials that can be used for pre-fabrication and even some owner-builder involvement.
      A couple of the Grand Designs series shows last year featured German factory built homes shipped to and erected on site in England inside a week with foundations already established and full fit-out finishing taking about a month.
      Factory building in Australia is something…

      Read more
    3. Ryan Farquharson

      Research Officer

      In reply to Geoff Clark

      Thanks for the reply Geoff, and I totally agree about smaller 'house' and more outdoor living. I currently have an 80m2 cottage on a half acre block with extensive decking, shedding and useable garden :). And before people harp on about density etc, we're a 10 minute walk from the shops and a transport hub....

      My point is that the graph in the article clearly shows buildings costs topping out at around $1000/m2 for the 10 star zero gen option. Either the graph is wrong, or the building costs I've come across are inflated.
      I'm desparately hoping the authors or a reader can give me some contacts of builders who can give me a 10 star zero gen home for around the $1k/m2 mark, as the graph would suggest.

      report
    4. Steve Hindle

      logged in via email @bigpond.com

      In reply to Ryan Farquharson

      Ryan you can over do it trying to build a 10 star home, the large extra cost and embodied energy used in trying to achieve a 10 star rating can become self-defeating. There was a good article in The Conversation on this subject.
      In short, its important to go for any energy efficient design, but be careful not to over do it.
      https://theconversation.com/why-energy-saving-homes-often-use-more-energy-20589

      report
    5. Ryan Farquharson

      Research Officer

      In reply to Steve Hindle

      Yes Steve, I saw that article too and I agree in principle. I guess that's where 'zero energy' has an advantage over a simple efficiency rating.

      Bottom line is that the graphic in this article suggestes you can build a zero energy 10 star home for a tad over $1000/m2 which my preliminary research suggests is wishful thinking. Even a very basic project home built by a volume builder that only just meets the minimum standards gets up to around $1k/m2 once you add all the site costs and extras.... Still no response from the authors.....

      report
    6. John P Morgan

      Physics teacher (ret).

      In reply to Ryan Farquharson

      I agree. $1k/sqm seems unlikely.
      My 102 sqm house mentioned above, was built in 2008 for $1400/sqm and we thought that was a good deal.
      We kept it that low by ignoring architectural appeal. It is just a simple box on a hill.
      Better still it was 9 star and 'off grid' so it has no actual running costs and that's where so many modern palaces get into real trouble.

      report
    7. Trivess Moore

      Research Fellow at RMIT University

      In reply to Ryan Farquharson

      Hi Ryan,

      To calculate the costs for the scenarios we modelled over 100 house plans of various sizes from bulk builders in Melbourne. Building performance and total build cost information were also provided from the builder for each house plan.

      We then systematically made changes to the materials applied within each house model (e.g. increasing insulation levels, drought proofing, improving the glazing of windows) to improve the modelled performance of each house plan from 6 stars – 10 stars…

      Read more
    8. Ryan Farquharson

      Research Officer

      In reply to Trivess Moore

      Thanks for the reply, Trivess.

      Perhaps someone from your panel of building industry experts could come to the lovely Adelaide hills and build a house for me? I could even provide them with free accommodation :)

      Seriously, there must be a flaw in your methodology, or is the building industry rorting customers with a 'green' bent???

      report
    9. Trivess Moore

      Research Fellow at RMIT University

      In reply to Ryan Farquharson

      Hi Ryan,

      Certainly there is a limitation with our research in that is it based upon models rather than as-built costs. We tried to reduce this issue by including a large sample size and engaging with the building industry experts to ensure we were using information which was relevant.

      There is other research which has emerged in recent years in Australia which supports that we should be achieving higher star ratings for lower costs than previously thought. For example the research undertaken…

      Read more
    10. Trivess Moore

      Research Fellow at RMIT University

      In reply to Trivess Moore

      Just to add to this point further, and to clarify, Jigsaw Housing aimed to build a sustainable (8 star) house for $200,000 (not a 200m2 house for $200,000!). The result was 98m2 (excluding the carport) for 249k (inclusive, excluding landscaping only).

      report
    11. James Hill

      Industrial Designer

      In reply to Ryan Farquharson

      A cheap and easy design featured in a Women's magazine many years ago, and it was cement stabilised mud brick, sealed against dusting, and with a wide overhanging roof which protected the walls from the elements, and all on a concrete slab.
      All internal walls were mudbrick, and laid by the owner, and the house was skewed around a front courtyard.
      Cannot remember the exact costs , it was in the seventies, but it was a beautiful house, which photographed well for the article.
      Should suit Adelaide with a sufficiently well insulated roof of white colorbond?
      Cathedral roofs are quite cheap and provide air circulation.
      Damn those Hippies!

      report
    12. Ryan Farquharson

      Research Officer

      In reply to Trivess Moore

      OK - well that's on par with what I've found thus far - approx $2.5k per m2, but "working to get the costs down". That's quite a bit more than what appears in the graph in the article.

      It's pretty clear to me that you should be able to build a 7 star home with some pretty basic and sensible modifications to a 6 star design for no extra cost, which to me says 7 star should be the new minimum.

      But to go beyond 7 star, then you start getting architects and specialist builders and materials involved and prices start to rocket. One then needs to think about pay back in terms of energy and dollars and greenhouse gases and maintenance and durability - it all gets a bit complicated...

      Might be best for me to sit tight for a few more years and hopefuly the building industry will have done their homework by then...

      report
  10. Trevor S

    Jack of all Trades

    Went from rendered masonry block, 4 bedrooms, 1 study, 1 office, 1 home cinema in tropical NQ, to a mudbrick, 1 bedroom, one mezzanine room thats an office/massage table room/guest bedroom/storage area for weekly farmers market stuff.

    The cleaning takes 10 minutes, 99% of the time I don't miss the extra room and 99% of the time I am glad we have a small cottage (two of us live here, I would want another room if I had 1 or 2 kids). It's only when the guests stay longer and I want to use the office later at night and it's not that much of a bother. TV broke down 5 years ago and and never replaced it, so that saves space.

    but we're off the grid in a milder climate (deliberate move), so electricity costs are capitalised and then depreciated. No need of A/C, central heating etc

    report
  11. Chris O'Neill

    Retired Way Before 70

    "That number is even higher among home owners, rather than renters"

    I'd say a very large number of those home owners would be people whose children have left home and hence, those rooms were previously needed. In that case, the homes could not have practicably been built smaller.

    report
    1. Trivess Moore

      Research Fellow at RMIT University

      In reply to Chris O'Neill

      Hi Chris,

      I think you are right that there are a lot of houses which have had larger families in them but now the children have left home and the changing use and requirements of a house over time is an issue. The cost and impact of downsizing means that many people chose to stay in the larger house, even though it will be costing them more to do so. There could be a role for duplex type houses where the family could expand into the house, but rent out a separately contained section when not required.

      report
  12. Chris O'Neill

    Retired Way Before 70

    "The Australian Bureau of Statistics has found that 78% of Australian houses have more bedrooms than are needed"

    Actually, I've noticed that big new houses often have multiple living rooms. Perhaps future ABS surveys should count the number of living rooms as well as bedrooms.

    report
  13. Chris O'Neill

    Retired Way Before 70

    "if you reduce the size of that average home by 5-10% to 225-235m2, the $20,000 you would save"

    I'm not sure that reducing building size by 5-10% would necessarily reduce building costs by 10%.

    report
  14. Anne Rawson

    retired lawyer/editor

    In 1972 we bought a three bedroom, one bathroom house in Canberra for $17,000, raised a boy and a girl who shared a bedroom til she was 11 years old, built on one extra living room with a north facing wall all glass, in 1980 got 8 photovoltaic panels that supply more electricity than we use, and now there are only two of us we don't need to downsize. That was $17,000 well spent. Big houses are a mystery to me. Who wants to clean more than one bathroom?

    report
  15. Michael Hay

    retired

    In 1968, in New Zealand, "International Building Systems" was born. It was a concept whereby one could purchase a basic home when first married, add rooms through buying or leasing during the growth of a family and then sell or 're-lease' rooms which were no longer applicable to ageing occupants.
    Unfortunately, this concept was not taken up on a production basis even although it was widely acclaimed in Australia and USA. It died in 1978 through lack of funds.
    The book "KIWIPREFABS" is worth reading if anyone is interested in looking at affordable housing. ISBN 978-0-9876595-1-4.

    report
  16. Robyn Preston

    Phd Student and Lecturer

    I live in a tiny miners' cottage in north Queensland. You can't have clutter and "stuff", you can't avoid your family for days, you share your space, you live simply. It's the way it should be.Totally adequate for 4 of us, 2 kids in one room. My neighbor raised 5 children in a similar home. In his childhood my husband slept on a sleep out with 4 brothers. Unfortunately the new council town plan indicates planning approval for 5 story "yuppie dog boxes" that you see down south (totally air-conditioned, even with ceiling fan on patio!). Our the little cottages will probably be knocked down as there are property developers moving into our area (I'm a renter). Apparently everyone needs a media room, study, extra toilet, cement walls to shut out neighbours noise (and the breeze). Our homes were moved here in the 1940s from a mining town, they were built by Chinese miners, who understood the need for shutters, large windows, verandahs.

    report
  17. Rob Morgan

    Corporate IT guy and ex-engineer

    There's a lot of truth in the theme of this article. We renovated a suburban bugalow into a generous 5 bedroom, 3 bathroom family home and it's been wonderful, but very expensive to run. The energy bills alone have been interesting, and that's with a carefully planned and built thermal design. We're now on the home stretch fixing the energy use with every possible improvement, but the building and yard maintenance workload is substantial, and never-ending. We choose not to employ constant teams of gardeners, cleaners, etc, and we're doing ok. I was very skeptical of the claims around higher running costs and effort for larger properties, but it's proven to be very true.
    But the day will come when we choose a more enriching lifestyle over an expansive suburban estate.

    report
  18. Shauna Murray

    Associate Professor; ARC Future Fellow, Plant Functional Biology and Climate Change Cluster at University of Technology, Sydney

    Thanks for the article.

    We also lived for a while in Tokyo, and it really showed us how much superfluous space Australians are used to. We live in a very small townhouse compared to the average, and still it would be considered the height of luxury for a family from Japan. Personally I don't want more space as it leads to more accumulation of stuff.

    report
  19. Rachel Dawson

    ecologist

    I live in a 4 bedroom home - 2 kids in their 20's are here on and off. I'm not ready to downsize yet, and am within walking distance of Sydney Uni, so I have student boarders. It's not right to have spare rooms when housing is so much in demand.

    report
  20. Michael Rogers

    Retired

    If someone with something to sell can sell you more than you need of that something, whether its fast-food fries or floor-space they will. Also in a society were status is associated with conspicuous avarice a bigger house is always better (often with a bigger everything else).

    It would be interesting to see a survey of how many people who had a windfall of money, spent that money on a bigger house.

    report