Australians seeking to live more simply have contributed to a fall in the size of newly-built homes, new research suggests.
Australian homes built in the past financial year were the smallest they have been in more than two decades, according to fresh data.
The average floor size of a newly built home was 186.3 square metres in 2017/18, including both houses and apartments.
That means new homes were 1.6 per cent smaller than the previous year and the smallest they've been since 1996, figures from the Australian Bureau of Statistics, commissioned by CommSec, show.
A rise in the number of apartments being built has contributed to the falling home size, CommSec chief economist Craig James says.
Apartments now make up 46 per cent of all new homes built, compared to eight years ago when they accounted for 27 per cent of new builds.
But Australians have also simply been more willing to inhibit smaller spaces since the size of homes peaked in 2009, Mr James said.
"We can point to a lot of things, like the global financial crisis, as being a change in people's mentality," he told AAP.
"People are wanting to live more simply."
More people are also willing to trade space for being closer to the city, Mr James said.
"You've got baby boomers, as well as millennials and Gen Y, which have got this preference for smaller accommodation, perhaps closer to city centres, whether it's regional cities or whether it's capital cities.
"Therefore, less travel time, closer perhaps to people's workplace, closer to things like cafes and restaurants."
Despite the trend, Australia still has the second-largest homes of any country, behind the United States.
"The house that we're building in Australia are still amongst some of the biggest houses in the world, and I suppose that gets down to the fact that we do have more land mass here," Mr James said.
The average free-standing house in Australia was 230.8 square metres in 2017-18, which was 0.9 per cent smaller than the year before.
But that size is still eight per cent bigger than houses built 20 years ago, and almost 30 per cent bigger than those built 30 years ago.
"There's certainly fewer McMansions being built because if we were seeing more of those, we'd see the house size increasing rather than decreasing," Mr James said.
Victoria had the biggest houses of any state or territory in the past financial year, at 244.8 square metres, followed by the ACT, Western Australia and Queensland.
The average house size in NSW fell to a 23-year low of 220.3 square metres.