They're being built to satisfy the demands of Australia's growing population, but apartment living has become a lifestyle choice for many.
About half of all new buildings are apartments and a CommSec report shows the size of the average new home is down 2.7 per cent over the past year. It's also down to a 20-year low of 189.8 square metres.
But the houses that are being built are bigger than ever.
"There's been change in the demography, Generation 'Y', the millennials, are basically preferring to live in smaller homes rather than the homes their parents may have lived in, in the past," CommSec Chief Economist Craig James said.
"You look at the size of the average freestanding house being built in Australia nowadays, it's still something like 30 per cent bigger than 30 years ago."
Victorians are building the biggest houses in Australia, with an average floor area of 242.8 metres squared, closely followed by Western Australia.
NSW and Queensland are next, while the smallest new houses are being built in Tasmania and the ACT.
The difference between the largest and smallest are about the size of a small two bedroom apartment.
The biggest apartments are being built in South Australia with an average floorspace of 152.3 metres squared, ahead of Victoria and Tasmania.
Colin Griffin from commercial real estate company CBRE said: "It's generally a combination, or a compromise, between space and price."
For older Australians, many consider owning a home to mean a house with garage and backyard.
But for younger generations, it's hard enough just to break into the property market. It means the Australian homeowners dream has changed to be on a much smaller scale.
"People really want to own but they need to own where they can afford," Mr Griffin said.
"If they're happy to live in apartments and come closer to the city and be closer to transport, then apartment living is definitely the way to go."
But apartment living comes with challenges, architect Paul Buljevic said.
"You could have an oversize by 20 square metres two bedroom apartment...But if you're meandering through the space with excess corridors and inefficient planning it can feel quite congested and quite small," he said.
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