The report, based on figures from the Australian Bureau of Statistics, found the average floor area of new apartments in 2017-18 in Canberra was 118.0 square metres, an increase from 95.8 square metres the previous financial year.

NSW has the smallest apartments at 116.5 square metres, a decrease from 230sqm the previous financial year. The Northern Territory has the largest apartments built at 136.5sqm in floor space.

The minimum for a one-bedroom apartment in the ACT is 50sqm while a two-bedroom apartment is 70sqm. Some developers in Canberra have proposed for apartments to be below the minimum.

The report also found Australian homes built in the past financial year were the smallest in more than two decades with the average floor size of newly built houses and apartments being 186.3sqm in 2017-18. That means new homes were 1.6 per cent smaller than in the previous year and the smallest they've been since 1996.

Canberra had the second largest homes built in 2017-18 with an average floor space for 242.3sqm. The ACT comes second to Victoria with an average of 244.8sqm, followed by Western Australia and Queensland.

A rise in the number of apartments being built has contributed to the falling home size, CommSec chief economist Craig James says.

Apartments now make up 46 per cent of all new homes built, compared to eight years ago when they accounted for 27 per cent of new builds.

But Australians have also simply been more willing to inhibit smaller spaces since the size of homes peaked in 2009, Mr James said.

"We can point to a lot of things, like the global financial crisis, as being a change in people's mentality," he said. "People are wanting to live more simply."

More people were also willing to trade space for being closer to the city, Mr James said.

"You've got Baby Boomers, as well as Millennials and Gen Y, which have got this preference for smaller accommodation, perhaps closer to city centres, whether it's regional cities or whether it's capital cities," he said.

"Therefore, less travel time, closer perhaps to people's workplace, closer to things like cafes and restaurants."

Despite the trend, Australia still has the second-largest homes of any country, behind the United States.

With Marnie Banger