One of Australia’s largest homebuilders, G.J. Gardner Homes, says it is experiencing significant rise in demand for more compact homes, driven by a trend to subdivide and a desire to live closer to the city.

The builder says that last week, Australian Bureau of Statistics figures revealed that the average floor size for a new freestanding house was 243.6sqm, down from a high of 248sqm two years ago.

New flats were the smallest in a decade with the national average being 133.7sqm and just 126.2sqm in Victoria.

The company’s managing director Ross Morley said clients are increasingly subdividing land to meet their lifestyle and financial needs.

“We have seen a considerable number of clients, particularly in the retirement market, asking us to subdivide their land to build an additional dwelling, which is a real sign of the times. They realise that they can sell one home or rent it out for some passive income.”

“Some of these people are asset rich but cash poor. Their money is tied up in their block of land so they are looking for ways to, not only free up some of their assets but, to also have lower overall maintenance and living costs.”

The company is responding to demand by offering tailored, compact, modern homes.

Morley said: “These small infill blocks almost always require a specific design to meet the site shape and planning requirements, so having a builder who can accommodate this at a competitive price is essential.

Morley also said that homes positioned on a smaller block, created as a result of subdivision, are most often purchased by a young family trying to buy in an inner suburb.

“Many young families are looking for an affordable price point to enter the property market. We have seen this happen increasingly in areas such as the inner Eastern suburbs of Melbourne including Camberwell, Hawthorn, Kew and Burwood.”

“They want to live in an area that is close to the good schools, parks and nice restaurants, but not too far from the city. Sometimes, buying a smaller home on a smaller block, makes this possible for them.”

Last week, Australian Bureau of Statistics figures revealed that the average floor size for a new freestanding house was 243.6sqm, down from a high of 248sqm two years ago. New flats were the smallest in a decade with the national average being 133.7sqm and just 126.2sqm in Victoria.