New Zealand’s new homes are getting smaller. Statistics New Zealand figures show the total floor area of consented new homes in the year ended January 2025 was just over 4.7 million square metres — a 7.2% decrease compared to the previous year, and the lowest level since 2015.
“New Zealand homes have been shrinking for a while now,” said Stats NZ economic indicators spokesperson Michael Heslop. The trend is driven partly by the growing proportion of multi-unit homes — apartments, townhouses, flats, and retirement village units are inherently smaller than detached houses — but stand-alone houses are also getting smaller.
The Numbers Behind the Trend
In 2021, the median floor area of a new home in New Zealand was 140 square metres. By 2022, it had fallen to 126 square metres — a 10% decrease. The downward trajectory has continued. Ten years ago, more homes were consented with a floor area above 200 square metres than below. That has now reversed: the majority of new homes are under 200 square metres, and the share of smaller homes continues to grow.
Why Homes Are Shrinking
The most significant factor is the composition of the consent pipeline. Multi-unit housing — the type most encouraged by the National Policy Statement on Urban Development and most commonly built near transport nodes — consists of dwellings that are typically between 60 and 120 square metres. As this segment grows as a proportion of total consents, the average floor area falls.
Build costs are also a factor. At $3,000 to $5,000 or more per square metre in many markets, the cost difference between a 140m² and a 180m² home is significant. Developers and homeowners are building to a budget, and reducing floor area is one of the most direct ways to reduce total cost.
What It Means for Builders
Smaller homes don’t necessarily mean less work — they mean different work. Multi-unit builds typically involve more complex sequencing, shared wall and foundation systems, and greater coordination between trades on tighter sites. Unit profit margins per square metre can be lower than for detached housing, but the volume of projects can compensate.
Builders gearing up for the multi-unit market need to think about their systems and processes — how they manage multiple units in parallel, how they schedule subbies across a terrace development, and how they handle the client relationship when the end buyer may not be known until after construction.