The number of single person households in Australia is continuing to increase despite the increasing cost of renting, poor housing affordability in many locations and rising interest rates, according to the economic forecaster and industry analyst, BIS Shrapnel .

The Australian Bureau of Statistics (ABS) Census data for 1991, 1996, 2001 and 2006 indicates the proportion of single person households has grown steadily in each census.

Single person households accounted for 24.3% of total households in the last census, up from 23.3% in 2001, 22.2% in 1996 and 19.5% in 1991, while the number of group households (share houses) remained fairly steady over the same period.

BIS Shrapnel’s Emerging Trends in Residential Market Demand, 2008 report, which analysed the data from the 2006 census and compared it with the findings of the last three census’, says the number of single person households is growing significantly within the first home occupier (20-34 year olds), upgrader (35-49 year olds) and empty nester (50-64 year olds) segments.

Conversely, the proportion of total households comprising families with children has steadily declined for the last 20 years, according to BIS Shrapnel.

However, this trend is particularly evident in the first home occupier and upgrader age cohorts, despite the rising average national income and measures such as the baby bonus.

Within the upgrader demographic, the number of households with all children under six has increased, while the percentage of families with older children has declined.

These trends indicate Australians are still waiting longer to have children (or choosing not to have children at all) and BIS Shrapnel believes this, and the rising number of single person households, is having a marked impact on dwelling choice.

BIS Shrapnel, Senior Project Manager and report author, Angie Zigomanis, points to a rise in the number of people living in flats, units or apartments, which has been gathering momentum since the 1991 census.

This has been most evident within the first home occupier and upgrader demographics, and this trend was particularly marked in New South Wales and Victoria.

“The 2006 census also shows the proportion of 20-to-34 year olds still living in the family home has increased from 21.5% of that demographic in 1991 to 23.3% in 2006,” said Angie Zigomanis.

“This is not an unexpected trend, given rising property prices and not surprisingly, New South Wales and Victoria, which had high priced residential property as at 2006 also, had large proportion of 20-to-34 year olds still living at home.”

Higher property prices have also impacted the number of total households that fully own their dwelling, according to Angie Zigomanis.

The proportion of fully-owned homes compared with dwellings being paid off or rented varies also from state-to-state. Victoria, South Australia and New South Wales have high proportion of dwellings that are fully-owned and BIS Shrapnel believes this is due to the slightly older profile of the population in these states.

Overall, the proportion of rental households has remained at 27-29% over the last 15 years. Rising occupancy in the younger age groups has been offset by a rapidly growing older population that has a higher rate of ownership.

However, Queensland and Western Australia have low share of households, who fully own their dwelling, although have high percentage of households that are purchasing a dwelling.

This reflects the average younger age of residents in both these states, according to Angie Zigomanis. Queensland has high proportion of households that are renting, according to the ABS, and Angie Zigomanis believes this could be due to the high migration inflow of that state and households engaging in short-term rentals before purchasing a dwelling.

The profile of tenure also varies by age group. 20-34 year olds are the most likely demographic to be renting, and this has grown from 49.2% of these households in 1991 to 52.9% in 2006, according to BIS Shrapnel.

On top of this, there is also an increasing proportion of 20-34 year olds, who are still living in the family home. BIS Shrapnel believes it is likely given the further deterioration of affordability since 2006 due to higher interest rates and rising rents, this trend could have accelerated.

The 35-49 year old cohort are most likely to be paying off a mortgage and this has increased in each census from 1991 (42.9%) though to 2006 (54.6%).

The majority of the 50-64 year old demographic fully own their property (48.2%), although a large percentage were still paying off a mortgage in 2006 (33.6%), while a smaller proportion were renting (18.2%), according to the census.

The overwhelming majority of 65-plus year olds fully own their property (79.9%), followed by those renting (14.9%) and a small percentage are still paying off a mortgage (5.2%), according to the ABS.

The growth evolution of particular demographic groups has traditionally driven demand in Australia’s residential market, according to Angie Zigomanis.

The baby boomer generation (those born between 1946 and 1964) has emphasised population growth for half a century and is now approaching the retirement years.

“The baby boomer generation is now aged between 44 and 62, a stage where the rate of children leaving the family home increases, resulting in a growing number of empty nesters,” said Angie Zigomanis.

“With the important edge of the baby boomer generation turning 65 years old in 2011, the retiree-aged demographic will take over as the fast growing cohort in the next five years. This transition will mark a shift in dwelling demand as baby boomers downsize their homes or consider moving into retirement accommodation.”

Between the 2001 and 2006 census, there was an overall increase in the proportion of Australians aged 65 and over living in retirement or aged-care accommodation, according to the ABS.

Most of this increase was concentrated in the demand for self-care accommodation and nursing homes, while utilisation of cared accommodation decreased over the same period.

BIS Shrapnel explains 50-64 year old households (empty nesters) and 35-49 year old households (upgraders) historically significantly favour separate houses, although a rising proportion are choosing medium and high density housing options.

This group will be the increasing driver of demand for small dwellings in the future, particularly given the significant growth in the number of households.

20-34 year olds and 65-plus year olds have an increasing and greater tendency for living in medium and high density dwellings and will continue to drive demand for these dwellings.

Upgrader and empty nester aged households are expected to continue to significantly favour separate houses, according to BIS Shrapnel.

These two household groups are most likely to have older children living in the family home. Angie Zigomanis believes retiree-aged households will also contribute to demand for separate houses during the next five years, due to the population growth in this demographic.