Experts share tiny home warning as interest from young people soars

Twenty-nine-year-old Ashley Kime thought she was doing the right thing when she bought a home in Central Queensland with her sister a few years ago. 

But increasing mortgage repayments and the skyrocketing cost of living forced the pair to sell earlier this year.

"Rates, power bills, insurance — everything [went up]. Food was even a stretch at some times," Ms Kime told triple j hack.

The project administrator knew that her chances of re-entering the traditional housing market were limited, so she turned to something more unconventional: a tiny home on wheels.

"It ticked all the right boxes, functionality and price-wise," Ms Kime said.

She is expecting her home to be delivered in a few weeks.

Ms Kime helped design the tiny home, but building from scratch comes at a cost. 

Building and material costs, adding in utilities and plumbing and relocation costs, will set her back around $145,000.

The average cost of a custom-built tiny home is between $150,000 and $200,000, according to people in the industry.

There is one cost Ms Kime does not have to worry about — renting land. 

She acknowledges that she is lucky to be able to park her tiny home on her parents' property in Rockhampton.

Eventually, Ms Kime's goal is to save up and buy her own plot of land.

"They're [tiny homes] a really great option for those who can afford them, and if you're in a position to do so, yeah, go for it."

Tiny homes' popularity increasing

Tiny homes straddle a regulatory grey zone between housing and caravans, so getting hard data on sales is difficult.

There is no official definition of what constitutes a tiny home — it could be a secured property like a granny flat, or something on wheels.

But people in the industry point to several factors to prove that more people are becoming interested in the concept of tiny homes.

"There were 39 businesses associated with tiny homes in 2021. There are now over 300 builders alone," organiser of the Tiny Homes Expos, Phae Barrett, told triple j hack.

She said the number of members of tiny home groups or forums on social media had grown exponentially in the last few years.

Great Escape Finances senior broker, Jamie Mitchell, told triple j hack that his business had seen a "significant increase" in the number of people seeking information on financing a tiny home.

"We used to get 5, 10 or 15 leads a month, but this year we're getting more like 60 leads [a month], and that's just over the last couple of years," he said.

The demographic of who is buying a tiny home is also changing, according to Mr Mitchell, who is also the treasurer of the Australian Tiny Homes Association.

"We are seeing a lot more people in their 20s and 30s, so they're young working couples, and that has been a shift from what we saw historically. I would say that probably at least half of what we're doing now fit in that [younger] demographic, with everyone else fitting in the other 50 per cent."

Ms Barrett has also noticed a "dramatic shift" in the kinds of people attending her tiny home expos.

"During COVID … it became particularly popular for women over 55. And then throughout 2022, it became very popular for Airbnb. In 2023, families started noticing and along came bigger houses," she said.

"The demographic is just getting younger and younger each year."

University of New South Wales city planning program senior lecturer, Laura Crommelin, told triple j hack many people were attracted to tiny homes for the lifestyle they offered.

"Some people are choosing to live differently and think more about sustainability, their impact on the world," Dr Crommelin said.

But she acknowledged that cost was a big factor, particularly for younger people who had been squeezed out of the traditional housing market.

Costs pushing people out

As the popularity of tiny homes soars, so does the price.

Melbourne woman Ayla, who asked for her surname not to be used, said she was attracted to the lifestyle that a tiny home offered. 

When she started looking into it properly, she realised that even they were out of her reach.

"I saw that what was an affordable option sort of started to shift a little bit," she said.

Ayla does not have family or friends with property, so she would have to rent land on top of paying off the initial cost of a tiny home.

"It does feel that you're still in the rental market because essentially you're paying [off the tiny home] and paying rent at the same time," she said.

Getting enough money together can also be tough, because banks do not give out mortgages for tiny homes.

Mr Mitchell, whose job involves brokering personal loans for people wanting to buy tiny homes, said personal loans came with their own challenges.

"The loans are shorter, they're over seven years, the interest rates are higher and it tends to make people a little bit more cash poor," he said.

Unlike traditional houses, tiny homes do not appreciate in value, which Dr Crommelin said could be an issue for young people who took out large personal loans with the hope of using a tiny home as a stepping stone.

"It's not an asset in the same way that a house would be, so it doesn't necessarily set you up for the future in the same way," she said.

On top of that, insurance for tiny homes can be difficult to get, especially in instances where people are renting land for their properties.

"Insurance companies, without knowing this space very well, are quite risk aversive," Mr Mitchell said.

Council red tape can also add to costs and accessibility. 

The lack of definition around what constitutes a tiny home is can create confusion for councils and owners, Ms Barrett said.

"There's over 10,000 people living across Australia and every LGA [local government area] in a tiny house. A lot of them would be doing that under the radar and the council may well know that they're there and they wouldn't take any action. It's normally on a basis of if your neighbour complains, we might come and see you," she said.

A question of fairness

While Ainsley Kime is happy with her choice to buy a tiny home, she said the lifestyle was not for everyone.

"It's definitely not the solution to the current housing crisis, but it is definitely a good option to alleviate some people's stress," Ms Kime said.

Dr Crommelin said while tiny homes could be a solution for some people, there were still issues around generational inequality.

"I don't think there's anything wrong with us as a society saying maybe the way we've lived in the past is unsustainable, and we all need to contribute to living in a more sustainable way, shrinking our footprint.

"But if we're only saying that to one part of the community or one generation while other generations or other segments of the community continue to live the same way, then that starts to feel pretty unfair."

And tiny homes do not help the people who are the least likely to break into the traditional housing market.

"If you're lucky enough to have that support from your family, then that's fantastic. But not everyone does," Dr Crommelin said.

"So, if this is our solution to the housing affordability problem, then we're not actually providing a solution to those people whose parents weren't lucky enough to have land.

"We need to tackle this as a big problem. I don't think we can tiny house our way out of this issue … We need to look much more holistically at how housing markets are working."