Sydney's two- and three-bedroom cottages are disappearing as the high cost of land makes them increasingly uneconomic.
The number of two-bedroom detached homes occupied in greater Sydney fell by more 7230, or nearly 9 per cent, between 2006 and 2011, analysis of census data shows. The number of three-bedroom detached houses fell by about 2 per cent in that period.
The small cottage just can't cut it with high land prices.
Bob Schwartz, chief economist of Pitney Bowes Software, which did the analysis, said two- and three-bedroom houses were becoming ''too small'' for the Sydney housing market.
''Those types of houses are in decline because they are simply not the best use of space,'' he said. ''The small cottage just can't cut it with high land prices.''
Some two-bedroom houses moved into a larger category between 2006 and 2011 because of extensions. But many had been demolished to make way for a bigger house or higher-density development. There was now ''an imperative in the Sydney housing market'' to renovate or demolish small detached homes in order to get a better return, Mr Schwartz said.
The census underscored the popularity of large detached houses. More than 37,000 houses with four or more bedrooms were added in Sydney between 2006 and 2011. Home builders also favour building new detached houses with four or more bedrooms because the returns are higher.
But the analysis revealed that almost 40 per cent of homes with four or more bedrooms added in the five years to 2011 had only one or two occupants. Mr Schwartz said this trend was also being driven by the high cost of housing.
''It's not just that they're looking for comfortable digs,'' he said.
''The reason we are going to four bedrooms or more is because of house prices. It's a property play … but it is also symptomatic of how the property market is being skewed.''
The number of two- and three-bedroom semi-detached homes and apartments also grew strongly between 2006 and 2011. Two-bedroom apartments proved the most popular higher-density option, increasing by 30,000.
Last month a Reserve Bank assistant governor, Christopher Kent, said strong growth in approvals for new higher-density housing, especially in Sydney's inner and middle suburbs, ''may be an early indication of a new trend in the housing market''.
Even though the total number of two- and three-bedroom detached houses fell between 2006 and 2011, those occupied by large families - with six or more members - rose by about 1200.
''That's an equivalent number of households to a small city postcode,'' he said. ''So it's a fair number of large families with six or more people squeezing into two or three bedrooms.''