In Perth, a $22 million development will build 88 micro apartments, most measuring 26 to 28 square metres — roughly the size of two average car parks. These units target fly-in, fly-out workers, students, and young professionals who want to live close to the city without paying inner-city rents. For anyone watching Australia’s housing affordability crisis, this is a test case: can living smaller actually work at scale, or does it create a new set of problems?
Disclosure: Some links on this page are affiliate links. If you make a purchase through them, Britwealth may earn a commission at no extra cost to you. We only include products and services that are relevant to the topic.
This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Micro apartments aren’t new — they exist in London, Paris, and New York. But Australia has been slow to embrace them. Sydney still enforces a minimum 35 square metres for studio units, while Perth’s planning authorities used discretionary powers to approve something smaller. In Brisbane, a subdivided house in Deagon now contains five self-contained micro units, each renting for over $400 a week. The question isn’t whether micro apartments can exist here — it’s whether they can be well-designed, financeable, and genuinely affordable. Here’s what you actually need to know.
What I tend to notice is that people either love or hate the idea of living in 28 square metres. The truth sits somewhere in the middle. A micro-apartment is a self-contained unit typically ranging from 20 to 40 square metres, with its own kitchen, bathroom, living area, and sleeping space — often part of a larger building with shared lounges, co-working hubs, or rooftop terraces. Done well, it’s efficient. Done poorly, it’s a storage unit with a bed.
If you’re weighing whether this kind of living — or investing — makes sense, the great Australian downsize conversation is worth reading alongside this one.
What a micro-apartment actually costs — and what you don’t see
The headline price of a micro-apartment looks attractive. A 28 sqm unit in Perth will cost less than a traditional one-bedroom apartment in the same suburb. But the full cost picture includes things that don’t show up in the listing.
First, lending. Most Australian lenders avoid financing properties under 35 square metres. Units around 30 sqm might be considered, but anything smaller is generally seen as too risky, especially during economic downturns. Some lenders apply stricter criteria or higher interest rates for properties under 50 square metres. That means your mortgage options shrink — and your deposit may need to be larger.
Second, ongoing costs. Service charges, council rates, and insurance don’t scale down in proportion to floor area. A micro-apartment in a building with a gym, rooftop terrace, and co-working space will have body corporate fees that eat into any rental yield.
Third, the rental return vs resale trade-off. Micro apartments can deliver high rental yields because purchase prices are lower and demand from singles and workers is steady. But when you want to sell, the buyer pool is much smaller. Families won’t buy a 28 sqm unit. Investors may be put off by the lending restrictions. That’s a liquidity risk you don’t get with a standard apartment.
Here’s a scenario that makes the gap clear. Say you buy a 28 sqm micro-apartment in Perth for $350,000. A comparable traditional one-bedroom (say 50 sqm) in the same area might cost $500,000. The micro-apartment looks like a bargain. But if the bank only offers you a loan at a higher rate — or requires a 30% deposit instead of 10% — your upfront cash jumps from $35,000 to $105,000. That changes the maths completely. For a clearer picture of what else adds up, the hidden costs of buying property article runs through the full list.
→ Scroll right to see all columns
| City | Minimum unit size (studio) | Recent micro-apartment project |
|---|---|---|
| Perth | No fixed minimum (discretionary approval) | 88 units, 26–28 sqm, $22M build-to-rent |
| Sydney | 35 sqm (regulated minimum) | Nightingale Marrickville: 54 units, 22–31 sqm, ballot allocation at 80% market rent |
| Brisbane | No specific minimum (rooming house reforms) | Deagon: 5 self-contained micro units in subdivided house, $400+/week each |
Where buyers, renters, and investors get micro-apartments wrong
Assuming “smaller” always means “cheaper”
In Deagon, Brisbane, five micro units in a subdivided house rent for over $400 a week each. Tenants Queensland CEO Penny Carr points out that for someone on JobSeeker, that’s 50% or more of their income going to rent. Micro doesn’t automatically mean affordable — location, demand, and fit-out quality all push prices up. Always check the rent-to-income ratio for your situation, not just the dollar figure.
Ignoring the resale risk
Professor Shaun Bond from the University of Queensland notes that micro apartments in the US and Europe have mixed living realities. What that means for Australian buyers is simple: if you need to sell in a downturn, the pool of willing buyers is tiny. Lenders are already wary. A 28 sqm unit that was easy to buy may be very hard to sell. If you’re investing, plan to hold for the long term and factor in the possibility that your exit strategy is a discount sale.
Thinking micro apartments solve the housing crisis
They don’t. The research is consistent on this point. Micro apartments offer an additional housing option but are not a full solution. Higher density and more apartment variety are needed — including traditional one-bedroom units and larger apartments for families, alongside townhouse developments. Treating micro apartments as the answer to affordability misses the bigger picture.
Underestimating how much design matters
A poorly designed micro apartment feels like “just a shoe box,” as the research puts it. Success depends on smart layouts, multi-functional furniture, built-in storage, open-plan designs, natural light, ventilation, and quality finishes. If you’re buying off-plan, you can’t assume the developer has thought about where your bed, sofa, and kitchen bench all fit without blocking each other. Look for floor plans that show furniture layouts, not just room dimensions. If you’re unsure about the legal side of a purchase contract, a service like JustAnswer Real Estate Law can help clarify what you’re signing.
How to buy, invest in, or rent a micro-apartment — the practical mechanics
What to look for in a micro-apartment
Start with the layout. A 28 sqm unit needs every centimetre to earn its keep. Look for built-in storage that uses vertical space, a kitchen that doesn’t eat the living area, and a bathroom that isn’t a wet room by default. Natural light matters more in a small space — without it, the unit feels like a basement. Check the building’s communal areas: co-working spaces, rooftop terraces, and shared kitchens can effectively double your living space without costing you extra square metres. The best-designed micro apartments use multi-functional furniture, open-plan layouts, and quality finishes to make small feel intentional rather than cramped.
How financing works for small units
If the unit is under 35 sqm, most mainstream lenders will say no. Some may consider units around 30 sqm, but expect a higher interest rate and a larger deposit requirement. If the unit is under 50 sqm, some lenders still apply stricter criteria. Your options include: specialist lenders who understand the micro-apartment market, a larger deposit (30% or more), or buying through a build-to-rent model where the developer handles the financing. Always get pre-approval before you start looking — a unit you love is useless if no bank will lend on it.
Navigating the regulatory landscape
Rules vary by state. Sydney enforces a minimum 35 sqm for studio units, which effectively blocks most micro-apartment development. Perth’s City of Vincent and WA Planning authorities have used discretionary powers to approve smaller units, but this isn’t guaranteed for every project. In Queensland, recent housing law reforms allow micro rooming houses with five or fewer people to operate without council approval and exempt them from infrastructure charges. If you’re investing across state lines, the regulatory differences matter — what works in Brisbane may not fly in Sydney.
Future outlook: what’s changing
Pro-invest Group plans 2,000 fully furnished 25 sqm flex apartments across Australia. The Nightingale model in Marrickville shows that ballot-allocated, below-market-rate micro apartments can work with the right design and non-profit backing. But the bigger shift is in planning policy. As state governments look for ways to increase density without triggering community backlash, micro apartments offer a path that doesn’t require massive land parcels. The question is whether regulators will update minimum size requirements to match what developers and residents actually want. If you’re considering a micro-apartment investment, keep an eye on planning reforms in your target state — they could open or close the door quickly.
Frequently asked questions about micro-apartments in Australia
Can I get a mortgage for a micro-apartment under 35 sqm? ▾
Are micro-apartments legal in Sydney? ▾
What’s the difference between a micro-apartment and a studio? ▾
Do micro-apartments hold their value? ▾
Who actually lives in micro-apartments? ▾
Micro apartments are a piece of the puzzle — not the whole picture
Australia’s housing affordability problem won’t be fixed by building smaller. But micro apartments can play a genuine role for people who need affordable, well-located, low-maintenance housing and are willing to trade space for location. The risk is that poorly designed, poorly financed micro units give the whole concept a bad name before it gets a fair shot. If regulators, lenders, and developers can get the details right — minimum design standards, sensible lending criteria, and genuine affordability — micro apartments could become a lasting part of Australia’s urban fabric rather than a passing trend.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Is the Australian Property Market Moving Towards a Renters Economy?.
Sources and Further Reading
The Great Australian Downsize: Is It Time to Embrace a Smaller Footprint? — A closer look at the broader downsizing trend and how it connects to the micro-apartment movement.
The Hidden Costs of Buying Property That Every Aussie Should Know — A practical breakdown of the fees and charges that add up beyond the purchase price.
YourLifeChoices (2025). Micro-apartment trend lands in Australia: how small is too small to live? 🔗
Homebuilding.com.au (2025). The rise of micro-apartments: a solution for Australia’s evolving rental landscape. 🔗
The Good Builder (2025). Micro apartments: innovative solution or just a shoebox strategy? 🔗
