Australians love tiny houses, so why aren't more of us living in them?

Housing affordability is a perennial problem in Australia and has worsened significantly over the past three decades.

Multiple reasons exist for the the lack of affordable housing. On the demand side these include population growth and increased migration to urban areas, easily accessible housing finance, tax incentives and a “strong cultural preference for owner-occupied detached houses”. On the supply side, affordability problems are exacerbated by inflexible and slow responses to the need for new housing stock, lack of infrastructure and generally inefficient planning processes and development assessment by local governments.

The increasingly popular tiny house movement has been mooted as a potential solution to some housing affordability issues. The movement originated in the US in the late 1990s, largely in response to housing affordability problems, the global financial crisis and the desire to live more sustainably. At the time, the tiny house movement was very small and localised; in the past decade, it has become increasingly mainstream.

But how realistic is the potential for tiny houses to address some affordability problems in Australian urban areas? Certainly, there is very strong demand for affordable housing and for alternative housing forms. Recent research (an online survey, a series of interviews and social media analysis) has shown tiny houses appeal strongly to a wide demographic, particularly to single-person or couple households.

Economic and social factors were the major drivers of the interest in tiny houses. Economic factors included affordability, the desire to own (detached) property without a high mortgage and to reduce expenses and debt. Social factors included a strong desire for “freedom” and to live an environmentally sustainable lifestyle in “a community”. Tiny houses were also considered more aesthetically appealing and better designed than standard houses.

For example, a retired woman in her sixties said:

“I want to live in a community where I have my own space, but am surrounded by people who actually speak to me and share the big things (mowers, gardens etc). We need to strive for more affordable land usage and more community.”

In Australia, however, few have actually built a tiny house. This is likely due to economic, regulatory and social barriers, particularly high land prices and having “nowhere to park it”. Other economic barriers found in the study included insufficient cash, lack of mortgage finance, inability to insure mobile tiny houses, and no potential capital gains.

Regulatory issues included onerous planning schemes and building codes and transport restrictions for mobile tiny houses. Social issues included the unwillingness to relocate (generally from urban areas with proximity to employment, social networks and services) and a dislike of renting and of units in “high rises”.

Tiny houses on wheels are popular in the US.Tammy Strobel/Flickr, CC BY

With respect to tiny houses, these perceived barriers, however, are largely relevant for detached properties in urban areas. For example, high land prices are primarily an urban issue; thousands of properties in regional Australia, even with existing houses, can be considered affordable (under A$150,000). Regional councils are often considerably more flexible than urban councils regarding house form, planning permission and building codes. In addition, very small dwellings are already common in both regional areas (i.e. beach shacks or converted sheds) and urban areas (i.e. studio units).

But despite the interest in the movement, the barriers may pose too great a challenge for most, particularly for the very tiny house on wheels now common in the US. Another factor may be the unavailability of purpose-built tiny houses (readily available in US). The tiny house movement in the US is now so popular that some bespoke tiny houses are approximately double the cost per square meter of standard houses.

It may be that the archetypal very tiny house on wheels will only ever appeal to a small, albeit passionate, niche of the total housing market. Nonetheless, this research seems to indicate a strong demand for affordable, well-designed, smaller and more sustainable houses, in a community. If policy makers and industry could meet this demand with land-use planning reform together with innovative housing forms and structured financing methods, this could potentially address not only some aspects of housing affordability, but also improve urban sustainability. Perhaps the age of the McMansion really is coming to an end.

In the words of two respondents:

“I hope the growing interest will make tiny house living attractive enough to developers to build them. At an affordable price.”

“Having title to a property is a key in gaining finance, and the only locations where this might be possible is on suburban lots flagged for increased density including ‘multiple dwelling’ or small lot ‘dwelling houses’.”

Heather Shearer is affiliated with the Greens Party