Going solo: The hidden reason why Australia needs more homes than ever

The rise in single person households is exacerbating the housing crisis — and it shows no evidence of slowing down, according to new findings.

Research by Ray White says the number of people living alone in Australia is on the increase and is impacting the volume and style of homes being built.

Data from the RBA and the ABS showed that more than one in four households in Australia now have just one occupant. 

The average size of households increased during the early stages of the COVID-induced lockdowns as young people in particular returned to the family home. However, by the end of 2020, that trend started to reverse resulting in the average household size hitting a historic low of 2.48 people by August 2022.

Chief economist at Ray White, Nerida Conisbee said the results seem counterintuitive at first.

“With lockdowns frequently restricting visitation levels during the pandemic, it would have seemed intuitive that people would move in together to have company. The opposite however occurred. Rising wealth as a result of record savings rates led to more people moving out on their own,” she said. 

“This higher demand for housing from more single person households led rents to rise even though population growth was very low. 

“Given the opportunity (and the money), it appears that there is a strong preference for people to not be surrounded by too many people in their homes.” 

The impact on the demand for increasing levels of housing has been significant.

“A rough calculation suggests that across the Australian population of more than 25 million people, a decline in (the Average Household Size) AHS of the magnitude observed between early 2020 and September 2022 (around 1 per cent, without any change in population growth) would alone imply an increase of around 120,000 households,” a report authored by Nalini Agarwal, James Bishop and Iris Day for the RBA said.

While the rising numbers of single person households may appear to be voluntary, Ms Conisbee said that it was not always the case. This was especially true for older Australians living in three or four-bedroom homes.

She said the existing housing stock was not keeping up with changing demographic needs.

“Australia is dominated by houses with three or more bedrooms,” Ms Conisbee said. 

“Most households with just one person have more than two spare bedrooms. While there is likely a preference by some to have a lot of spare rooms, the reality is that finding a home with just one or two bedrooms is difficult unless you want to live in a high density area or in a high rise apartment building. 

“There is a growing requirement for smaller medium density homes, particularly in inner and middle suburbs around Australia.”