The market for small low-cost houses by commercial group builders is gathering pace, as cash-strapped Aucklanders squeeze in and up.

Hobsonville Point tested out demand for tiny places with the three Axis Series Small Home Test Lab houses, built by Classic Homes. One 40sq m stand-alone on a 111sq m site sold for only $339,990 - well below the Auckland region REINZ median of $610,000.

A range of container housing is on the market and demand for sleepouts is rising.

Now, GJ Gardner operations director Mike Fraser says the demand for diminutive places is so strong that a new 140sq m, high-tech Space Smart housing concept had been released, designed for sections of around 300sq m, selling for only $240,000 "but it's very highly speced, highly engineered. The whole purpose of it is about allocation of space," Fraser said.

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Many new houses in New Zealand are over 200sq m but Fraser predicted demand for smaller, cheaper places would rise.

The Apollo 142 Space Smart house is a stand-alone three-bedroom house with double carport, TV/rumpus room and combined kitchen/living/dining areas. Fraser said it could be configured for long, narrow or square sites. The price depended on cladding and situation: $240,000 would see it clad in a James Hardy product on a flat site but it could be clad in brick and built on a sloping price for more, Fraser said.