Outside - yes, inside - no.

Why? Because with the lottery in place I can't choose when I'm able to buy a medium or a large house. I let go a personal medium in the past thinking I'll just buy another one immediately when Empyreum is released, but then the lottery got implemented and I couldn't. That's why I won't let a medium/large house demolish again even if I'm not currently using it. I'll just keep my property until I have the time and gil to decorate.