Stockland CEO blasts 'extravagant' homes

Australia's love affair with large homes is extravagant and unsustainable and their size needs to be reduced to make housing more affordable, says developer Stockland Group.

Chief executive Matthew Quinn also said governments needed to back adequate planning if the nation was to affordably house a forecast population of 36 million by 2050.

The average house price was already $485,000, far higher than the $330,000 the average first home buyer could actually afford, Mr Quinn told an Australia Israel Chamber of Commerce business lunch.

He said metropolitan planning strategies were inadequate for a growing and ageing population and there was dysfunction between each level of government in dealing with housing.

"The federal government drives the demand, state government deals with the planning and the local government does the approvals," he said.

"They don't talk to each other, in fact they can't stand each other.

"We need certainty that government will follow through with strategic plans it puts in place.

"We need certainty that development assessments will be delivered in a reasonable timeframe."

Mr Quinn said there was a huge scope for cities to become more population dense.

"At 83 square metres [for an average dwelling size per person] our housing is extravagant ... and it is not sustainable," he said.

Australia's largest residential developer said it was building smaller houses that used space more efficiently.

The company reduced its average lot size to 540 square metres and recently began to sell its smallest house yet - 144 square metres at its Highlands community in Melbourne.

Mr Quinn said the homes were selling well as people opted for less debt when buying smaller houses.

"Why pay for a formal dining room that you use once a year and have all of that debt to pay for that formal dining room, when you could have a life instead."