The average floor area of new homes has been shrinking over the past 18-months. Smaller lot sizes may be partly responsible. But we suspect the key driver is increased construction and land costs which, combined with tight credit conditions, have forced builders to cut floor area so they can provide homes which are both affordable and profitable. That suggests the recent drop in new home sizes will not be accompanied by a fall in their price, and cheaper, starter homes will remain in short supply.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services