Only a few years ago people were spending 40% more on new houses in Perth Western Australia and the home building industry was in a boom with a shortage of tradesmen and building experts. The shake up in the economy and the changing lending criteria of banks has reduced the amount of equity values throughout Perth and Australia which has led to cheaper house prices being sought by potential home buyers considering building a new home.While lending is becoming tighter, Perth is also experiencing delays with land availability which is increasing pressure on land developers to create more available lots of land in their subdivisions. This causes rationalisation where the average block size is being reduced in size to provide more land stock. Future subdivisions are also being affected by the credit crunch which is going to significantly impact on their release dates. While planning approvals are still extremely slow and should be addressed by the state government, this is no longer the major factor. Our economy is still in recovery mode, with the resource sector no delivering the same punch it was in 2006-2007.When the land release blocks get smaller and the R Codes (Residential Design Codes) don’t get amended, the average 50% site cover rule is enforced meaning home buyers and builders can only cover 50% of the block. If the average block is 500 square metres then the house can be 250 square metres in size, which is a decent size 4 bedroom, 2 bathroom home with a double garage and 2 living areas. However, as the blocks get towards the 400 square metres and smaller, the obvious choice is to design and build a two storey home. With affordability being a huge issue, a large number of buyers are no longer interested in spending $500,000 or perhaps they simply are being refused finance at that level. So they are looking for alternatives.A number of builders in 2010 started to release a ‘budget range’ of cheap 2 storey home designs intended to fill a niche in the marketplace and found that the demand was high for more affordable 2 storeys. So what is a cheap 2 storey home worth these days? Some home builders are advertising a 2 storey home under $300,000 however it’s really false advertising. They exclude necessary costs such as site works which will take the home over the $300,000 mark. Add to that your finishing costs and most cheap 2 storey home building costs will end up being somewhere between the $350,000 and $450,000 price range. So if you bought your block of land for $300,000 you’re looking at about $700,000 to complete your new home.To create a 2 storey house design that is on the lower end of the market a number of design considerations must be made. First of all, the overall size must be reduced. Do you remember the days when minor bedrooms were 2.7m wide x 3.0m long? We haven’t seen that in Perth house designs for over 10 years and even first home buyer homes are often 3.0m x 3.0m. But it’s time perhaps that a bedroom becomes a bedroom again. No more study desks and extra space for the sake of space. Would it be such a bad thing if your kids weren’t shutting themselves in their rooms all the time? My personal opinion is that it may be more healthy for us all to revert back to smaller bedrooms, just to get out more.Options such as external render, which has also been extremely popular are now considered an added unnecessary expense which can be replaced with 2 course face brickwork which is the cheapest alternative. Having a pitched roof instead of a flat skillion roof is also cheaper, and avoiding box gutters and parapet walls if possible will also help reduce building prices.If the credit crunch is affecting your home building budget, perhaps it’s time to reassess what is most important to you. Speak with your Building Broker, New Home Designer or Architect about ways to not only reduce building cost but also perhaps improve your lifestyle through clever design initiatives. While the economy is still uncertain, the baseline factors are still underpinning the city of Perth that we have a need for new houmes. Having a cheap 2 storey home design doesn’t have to mean inferior home design if done properly and with the current demand for affordable 2 storey homes for smaller lots, this may become a staple in Perths housing market.