Do Millennials need living rooms?

A debate is going on about the size of housing, set off by an article for the Adam Smith Institute by architect Patrik Schumacher in which he suggests that an easyJet approach to housing should be explored. It's a long, but interesting piece about housing in general (you can read the whole thing here) in the 21st century and covers many areas, but the section that's caused the most rumpus is this:
Currently studio flats below 38sqm are not permitted. Yet, units half that size, built at an earlier time, are rare and thus at the moment overpriced, hotly desired commodities, for rent or for sale. Lifting this prohibition would allow a whole new (lower) income group, which is now excluded, to enter the market. This move would both boost overall unit numbers and affordability.