How small is too small for an apartment?

A law against little homes? 

The Victorian Government is considering a new rule that would mean apartments have to be bigger than 37 square metres, or bigger than 50 square metres if they have a separate bedroom.

Why would we do it, especially when tiny homes are in huge demand?

I went to look at this little flat in East Melbourne a while ago. A bedsit in a nice location, in a beautiful building, with about 35 square metres of floorspace.

east melbourne flat

It turned out to be mouldy and squalid, and then sold for $370,00. But I would have happily lived in that much space if properly appointed (although not at that price!).

Is there inherently anything undignified about having one room that operates as bedroom, kitchen and lounge room? It is doubtless less comfortable, but I suspect that it is also true of driving a Barina rather than a Range Rover.

In fact, housing should probably be less regulated than cars. You can’t crash a house into someone else. 

These brand new places in Fitzroy look like they clock in very small indeed, and they’re apparently selling, starting at around $300k.


The fact of the matter is that small homes may suit many people best, for any number of reasons.

People might feel cosier and more secure in a small house. People physically unable or mentally indisposed to do housework may love them. Environmentalists may choose them because they require less energy to light and heat. 

Certainly the single-person household is on the rise in a major way – up to 24 per cent of households from less than 20 per cent 15 years ago. So why would we regulate against small homes?

Part of the reason might be the psychology of decision makers.

People who make laws tend to live in large and charming detached houses. They wouldn’t want to live in a tiny little home. So they imagine they are helping the unfortunate by making sure homes are not small.

Politicians do not tend to live in the following: caravans, boarding houses, cars or under bridges. Lawmakers may struggle to empathise with those people, for whom a real home is a lifelong ambition they may never achieve because it is too expensive.

Very small studio apartments help make housing more affordable in two ways.

Not only do they cost less than a one bedroom house – which could be significant on its own – but they also allow for developers to put more homes on the same space, which increases the potential housing supply.

The worst thing you can say about a “too small” apartment is that they will be hard to sell. That the market for them will be small. That is equally true of a 20 bedroom mansion, and the same logic will apply – drop the price. 

If in ten years they prove unpopular, that will actually provide relatively cheap homes near the city, for a small group of people who would otherwise be shut out. I could only support such a policy.

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Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

3 thoughts on “How small is too small for an apartment?”

  1. Agreed. I think there needs to be tougher standards on build quality, and energy use – these are qualities that are difficult for most people to discern in an inspection, but not restrictions set so high on the living space. I have lived in small apartments – tiny by Australian standards – and they were fine. Some adaptation is required and a careful use of space but worth the trade off for the convenience of the location. They aren’t for everyone but they should be allowed for people who want them. There is a strange kind of moralism about people wanting to live a lifestyle different from the tradition quarter acre block in this country. People cling to the suburban lifestyle even if it seems to be grossly inefficient for them. I have nothing against the suburbs – there are some incredibly beautiful ones – and I live in a 1950’s suburban subdivision myself. but it clearly doesn’t suit everybody and a noticeable proportion of people don’t have the time, skills or money to maintain their own yards. The reality can be embarrassingly far from the dream.


    1. Having a yard full of long grass that causes you only feelings of mowing-related guilt seems like the ultimate wasted investment. People want to live in the suburbs, but we need a lot more apartments out there!


  2. I’ve liked the idea of studio apartments like the ones you mentioned and considered buying one when I was single.

    As a student ina share house, all I needed to be happy was my bedroom where I spent most of my time as I had made it pretty comfy with my little couch, TV, desk and bed. Kitchen and bathroom were the areas in the house we shared as there wasn’t a living room, and it worked a treat.
    When I moved into a rental with my partner, we spent most of our time on the couch and slept there or the bedroom and hardly used the second room. It was just extra space that we had to spread our things out but I realised we could have also been happy without and a one bedroom would be fine with us two as well.

    Never bought the studio as a few years later a townhouse became more suitable to buy. Mainly to get ready for kids and a place about 40 minutes out of the cbd was worth it. $380k last year.

    Still love the look of studio apartments I think if it suits your long term goals etc then that’s awesome!

    With apartments don’t forget body corporate and water bills that might be a pain. A friend bought an apartment and has to pay fees and a quarterly water bill that is worked out between the apartments there. As a single person she feels ripped off as the other apartments have families or would use more water than she would.
    That’s the main negative thing to consider and be prepared for.

    I heard there’s a special accessory that you can buy and attach to an apartment so that a separate bill comes for yours and doesn’t include others. A worthy investment i would say.

    That’s my bit on studio apartments etc that I wanted to share. :)


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