Soaring real estate prices have led to smaller houses and condos, and the need for inventive solutions to space limitations – one of the fundamental issues in design today. Dare to dream big and your rooms can be a triumph of style over size.

Principle: Built-ins and modular furniture units maximize storage and provide custom solutions for even the tiniest of spaces. The smallest rooms often end up as home offices and can benefit from built-in or modular furniture that effectively utilizes vertical and horizontal space. Here, built-ins like the bookcases in the foreground provide valuable storage, contain clutter (essential in small spaces) and define the room without enclosing it. If your storage needs grow, it's easy to add more shelves to the back wall thanks to the many affordable options available.

Principle: Streamlined furnishings, mirror and glass emphasize available space. In order to visually expand a room's size, designers and architects include negative space (the areas of emptiness that surround furniture) wherever they can. By choosing furniture with legs rather than skirts, incorporating glass where possible, and adding reflective elements like mirror, crystal and silver to an interior, you can amplify available light and space to create an expansive feeling.

Principle: Monochromatic colour schemes visually enlarge a space. Monochromatic colour schemes, in which all colours are close in tone and value, do an impressive job of visually expanding a room. The reason? When there's no contrast (the strong distinction between two values like black and white), the eye is able to move through a room uninterrupted, which creates the illusion of additional space. In this cosy bedroom, bronze greens dominate the colour palette and are punctuated with pewter, which has a nearly equal value. Since a monochromatic decor also emphasizes the various textures within a room, it creates an overall mood that's restful and sensual.

Principle: Multipurpose furniture creates flexibility within a space. Today, rooms are often required to serve more than one function. For instance, a guest may be temporarily housed in the living room or home office. In this library, a large daybed provides ample seating where visitors can curl up and read or enjoy a board game. Once the cushions are removed, it's a comfy bed with a softly upholstered wall for leaning against.

The dos and don'ts of flexible furnishings
DO choose furniture that does double duty. A coffee table that rises to eating height, for instance, or a pair of console tables that can be pushed together to form an impromptu dining table.

DO use chairs rather than sofas for maximum flexibility. They require less space and can also be moved around more easily.

DO consider a Murphy bed when a room has to accommodate an overnight guest. Because it's stored in the wall, a Murphy bed is ideal for occasional use and is a discreet addition to just about any room.

DON'T opt for a sectional with arms, which limits the way it can be positioned. Select an armless version, which is easier to get through doors and into apartment elevators.

DON'T overlook an island, which works not only in a kitchen but also in an office, laundry room or crafts room. Choose one with wheels; it can be set against a wall when not in use.

DON'T allow clutter from a home office to ruin the enjoyment of a room that's also used after business hours. Pick a storage unit that can be fully closed to hide work come the weekend.