The Chinese government’s landmark policy to prod couples to have up to three children will fundamentally alter the housing industry, and spur developers to build bigger homes to accommodate larger families.

Flats smaller than 90 square metres, which make up 70 per cent of the homes built by all residential property projects, are likely to give way to larger classes of abodes: those between 90 and up to 144 square metres, and luxury residences larger than 144 square metres, according to E-house China Research and Development Institute.

“If the policy is implemented successfully, we will see (an increasing number of) bigger families that will require larger homes with better space utilisation,” said the institute’s research director Yan Yuejin, adding that the average size will probably rise to 120 square metres (1,291 sq ft). “Developers should revisit their home design and launch projects that can cater to the changing demand.”

China’s government officially abandoned its one-child policy in 2015, after enforcing it for 35 years, replacing the population control last month with exhortations for families to have three children to replenish a shrinking workforce and reverse the greying populace. The availability and affordability of suitable housing are often cited as the biggest hurdle for many couples in China’s major urban centres, as they contemplate upsizing their households.

The U-turn in China’s population policy followed the revelation during the once-in-a-decade census that the country’s birth rate had fallen to historical lows. China recorded 12 million births in 2020, the fewest number of babies born in 60 years, according to the census data.

“The landscape of house products in China will be reshaped and the average size will probably be lifted to 120 square metres, which can host three children, the parents and sometimes even their grandparents who need to take care of the grandchildren,” Yan said.

April Feng, 35, who works in an investment fund in Shenzhen, is one such potential buyer, as work-from-home arrangements and lockdown measures often required additional family members to care for each other, increasing the need for liveable space. She is looking for a four-bedroom flat of at least 150 square metres.

“My husband and I have been looking for a bigger home ever since Covid-19 hit last year, as we are spending more time at home than before,” she said in an interview. “My parents-in-law came to take care of our second child born last year. We are considering having a third born in the future since now it is allowed. Our current home only has three bedrooms and it would be a bit squeezed.”

Three-room and four-bedroom designs will become more popular, said the Beike Institute Research in Beijing.

“If the three-child policy successfully stimulates the increase in the number of family members, it will definitely boost the demand for larger homes, but it takes time to see the impact,” said Cristiano Cui, the managing director of the developer Modern Land in Beijing. “In the short-term, it hardly has any direct effect.”

Country Garden Holdings, one of China’s largest property developers by sales, does not have any immediate plan to alter its designs or offerings to echo the government’s new population policy, according to a spokesman.

“If there is increasing demand in the coming years with more couples heeding the call from the government and deciding to have more children, we will have larger sized ones accordingly,” the spokesman said.