Plenty of people in Hong Kong and Japan live comfortably and happily in apartmetns as small as 300-400 sqft where as in many cities in the west such small apartments are not allowed. That's a building code issue. You can't build cheaper housing because of the code. Similarly in many areas house require garages or parking space and front yards of a certain size by law. Again, housing codes dicate whether you can make something cheaper or not.