Australia is rapidly becoming a nation of loners - and there are big implications for us all

In this piece, we look at the impact the changing face of Australian households could have on the property market.

Single-person households on the rise

Throughout much of Europe, the United Kingdom, and United States, living alone has become more common since at least the 1970s.

And the number of one person households is forecast to grow in all OECD countries over the coming decade.

Households have become smaller and more diverse as a result.

While the most popular household size in Australia is still two persons, shifting lifestyle trends, ageing populations and attitudes to marriage have sparked change since the latter half of the 20^th century.

When it comes to lone households, the proportion has also steadily increased from 20% in 1991 to 26% in 2021.

At the same time, the share of larger dwellings has consistently increased while the share of Australian dwelling stock with two bedrooms or less has fallen over the past 30 years.

The rise of single person households is driven by several factors, including:

• Demographic shifts: The ageing population is seeing seniors more likely to live alone than any other age group. People are living longer and choosing to be alone or rely less on intergenerational living arrangements.
• Marriage and family trends: Delayed marriage and decreased fertility rates, as well as the growth of diverse family structures, has also led to an increase in single person households.
• Changing social norms: Attitudes towards living alone have become more accepting, and people are more comfortable living independently and pursuing their own interests and goals.
• Economic factors: Higher incomes, a higher female participation rate in the labour force, the rise of the gig economy, and remote work flexibility has given many more scope to live and work from anywhere. This has also contributed to the increase in single person households.

Living with a partner is projected to remain the most common living arrangement, but the share of single person households has increased and is projected to continue to do so.

Many more Australians are set to live alone in the coming decades.

According to the latest available data from the Australian Bureau of Statistics, the proportion of one person households is 25.6% of all dwelling make-ups, up from 24.4% in 2016 and just 20.1% in 1991.

The pandemic played a role in the changes between 2016 and 2021, with lockdowns and restrictions seeing more of us live alone. And particularly amongst renting households.

But it’s all part of a longer-term shift. This has important implications for our population’s housing wants and needs.

Rightsizing housing supply

The ABS estimates that by 2041, which is in 18 years’ time, there will be between 12.6 and 13.2 million households in Australia.

That could mean close to four million additional households compared to the number of classifiable households at the time of the 2021 Census.

Single person households are one of the fastest-growing types, and between 3 million and 3.5 million people are projected to be living alone in 2041.

That could be anywhere between a 19% to 29% share of the additional households projected by 2041, which could mean more than 1.1 million additional lone person households and up to a 28% share of one person households.

In the past five years, 965,098 new homes were built.

This suggests that even with the current housing affordability challenges some face, we’re not building enough homes to sustain the projected growth in households, let alone the right mix of residential dwelling structures that are rightsized for demographic changes.

Furthermore, the rate at which new dwellings are being constructed has fallen further behind in recent months. The current challenges with rising interest rates, cost pressures and labour shortages have dented output.

Detached housing commencements in the 12 months to September 2022 are 4% above the prior five-year average. In the 12 months to September 2022, 19% fewer apartments and semi-detached homes were started relative to the prior five-year average.

The increase in lone living through the pandemic had a sharp impact on the national rental market, pushing rental price growth to record highs, which should be a warning as to how seemingly small shifts can have such a drastic impact on the population’s wellbeing.

Smaller household sizes means that there will be more households for any given population increase and this has significant implications for housing demand, as well as the inefficiencies of current dwelling stock, and what we need to build and where.

As the number of single person households increases, there is likely to be an increased demand for smaller dwellings more suitable for single occupancy, both to rent and own.

Relative to other household sizes, single person households are more likely to own their home outright, or rent. In particular the increase in the share of single person households who rent, brings its own set of implications for national rental stock and the build-to-rent sector.

Older Aussies are increasingly more likely to live on their own. Picture: Getty

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Single person households are also likely to have different priorities and housing preferences, for example, prioritising location and convenience over the size of the dwelling.

This leads to an increased demand for properties in areas with walkable access to amenities and public transport, as well as a focus on community, security, and ease in maintaining social connections.

Overall, the increase in single person households is likely to have a significant impact on the housing market, and both policy makers and industry participants will need to consider these trends as they plan for the future.

Moreover, Australia’s growing population, combined with a slowdown in the rate at which new dwelling stock is being constructed, is a problem in ensuring we are building enough homes to house the nation… let alone the right type of homes.