You all overlooked this point. Why do you suppose there are hundreds of developers trying to sell tiny apartments to people? Its really quite simple. The smaller they are, the larger the return for the developer. Do you honestly think they are heroic efficiency experts trying to save our society from the evils of consumption and consumerism and lead us to a brighter future where we all learn to live with less and buy less? Or are they simply trying to maximize the return on their investment in a piece of land?
I think it’s wonderful that you think we should downsize to help these developers , but isn’t there an argument that the developers have a role to play here too in providing decent sized accommodation for humans instead of simply accepting smaller and smaller units because they say so?
I've made a counter point to this many times and I come at this from the developer perspective, but your thought process on this is essentially wrong (as Ramako point out in his post). Developers typically make a fairly consistent % profit within the $psf of the product they sell. So a 400 square foot or 800 square foot or 1,200 square foot unit the % profit is very similar - the smaller units actually cost more to produce as they require more appliances (i.e 3 kitchens rather than one when comparing a 400 square foot to a 1,200 square foot unit) - there are also additional taxation implications (i.e. development charges are charges on a per unit basis) and Tarion enrolments etc are charged per unit + municipal parking requirements which impact downstream costs when constructing underground parking facilities (which are generally built at a loss in most developments even when charging $25,000 per parking space – fewer units means lower cost).
Also think of the extra overhead, logistical and marketing costs of building a 150 unit building (large units) vs a 300 unit building (small units) - that's an extra 150 units to sell, an extra 150 agreements of purchase and sale, legal issues, deposits etc. That’s an extra 150 people to deal with throughout the after-sales service process and an extra 150 people to take through all the various Tarion Warranty process issues. There are a lot of costs to deal with in selling smaller units.
Here is another way of looking at it. Think of a building with a 7,000 square foot floor plate. Knock off 1,500 square feet for elevators, circulation space, HVAC & fire escapes and the developer is left with 5,500 net square feet that they'll sell at $500 psf. That produces a revenue stream of $2,750,000. It doesn't really matter if that space is divided into 4 units or 8 units - the overall revenue stream is the same and the $psf is generally going to be the same throughout that floor-plate and the % profit be it 5% or 10% or whatever is generally going to be the very similar for different unit configurations.
So I really don't understand this argument that smaller units or more profitable. If anything they are more expensive to manage from a materials perspective (kitchens and bathrooms are more expensive then empty rooms) and more expensive to manage from an overhead & after-sales service perspective. Lastly the $psf throughout a building for various units sizes is generally the same. It comes down to managing risk.
Developers build what they can sell. The problem is that as average $psf continues to increase, that consumers can't afford larger spaces - so that spaces keep getting smaller to fill market demand. Any of the developers I know would gladly sell larger units if they could. The reason Adam Vaughan is trying to legislate 3 bedroom units is because there is little to no demand for them and developers aren't including what they can't sell in their product mix. There is no significant difference in profitability - it's all about what sells and what sells the fastest - developers don't want inventory hanging around as it increases risk and impacts financing arrangements.
