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Remember the pandemic? It abruptly changed how many of us lived.
Some were initially forced back in with parents after losing their job and then flew the coop again when fears that our economy would tank subsided.
As the working-from-home revolution became more than a passing necessity, others took a leap of faith and moved away from big cities. This fuelled a housing boom that shocked locals in regional locations, especially near the beach.
Some who stayed behind in big cities sought out larger homes in the suburbs, maybe with a spare study. And – perhaps after being cooped up with flatmates in rolling lockdowns – more of us decided to live alone or with partners.
But don't believe anecdotes.
Our central bank just published a paper that shows that trends in household composition — how many of us are living in a property on average and who we are living with — sped up since the start of the pandemic in early 2020.
The Reserve Bank of Australia (RBA) has been arguing for a while that the change in how we decided to live during the pandemic was one reason why rents didn't drop sharply in most areas, despite the surge of emigration early in the pandemic and population stagnation while borders were closed.
"The decline in average household size since the start of 2020 – around 1 per cent – is estimated to have contributed to around 120,000 additional households being formed," RBA analysts noted in that paper.
"And, as a result, additional demand in the rental market.
"Average household size has remained low in the face of the recent tightness in the rental market and rising rents. Solid growth in incomes (and, for some, increased working from home) has underpinned demand for space."
Of course, it's not the only factor putting extra demand on the rental market.
There's been another trend bubbling away for years that preceded the pandemic upheaval. More of us are renting, and many are doing so simply out of necessity, not necessarily choice.
This trend has also just been mapped out in a separate research note by the RBA.
"Renting has always been more common among younger households; around half of all heads of renter households are between 25 and 44 years of age," this piece on the rental market by RBA analysts notes.
"However, the share of older households renting has risen over time, and single older women are the fastest growing group in public housing."
And public housing? That's not catching up.
"Shortfalls of public housing for those most in need have also become more acute, with the number of 'greatest need' households on public housing waitlists almost doubling since 2016," that piece notes.
"While the stock of public housing has grown by 3 per cent over the past decade, the total number of households in Australia and the total dwelling stock have increased by around 20 per cent over that same period.
"While many of the households on waitlists will be receiving rental assistance for a private rental, shorter leases mean that this alternative offers less security of tenure than public housing."
Whether it's for that extra 120,000 homes created by the anti-sharehouse effect during the pandemic, or those longer-term historical issues bubbling away, Australia isn't building enough properties to catch up to demand.
"Looking ahead, growth in the supply of new rentals available to the market is expected to be subdued over the next few years," the RBA notes.
And, it says, property developers are telling the RBA they don't see much incentive to build more rentals for us to live in.
The central bank says it is being told that several factors make it less attractive to build rentals, including higher interest rates, inflation hitting the construction centre, and issues with apartment pre-sales.
"The decline in the demand for new dwellings is expected to weigh on overall dwelling investment over the next few years. As a result, vacancy rates are likely to remain at low levels."
This is not good news for already stressed renters.
Property market analysts regularly argue that vacancy rates are one of the biggest factors that allow landlords to keep jacking up rents.
Sure, landlords may be passing on their higher mortgages to you right now.
But, as the RBA's governor argued recently to the Senate, they can only really get away with doing this in an environment where people have few other choices about where to go.
"Many landlords are putting the rent up and saying to their tenants, 'Interest rates are up, so I've got to put my rent up'," Philip Lowe argued to the Standing Committee on Economics last month.
"They say that, and that's true, but they can only do that if the market allows them to. You can't put your rent up if there are a lot of vacancies because the tenant will ultimately go somewhere else."
"The critical issue here is the lack of rental accommodation. That's what's driving higher rents, not higher interest rates."
There's another part of the RBA's recent research notes that shows who is likely to keep bearing the brunt of this maelstrom.
This graph shows that people in higher income brackets have historically, over the decades, received wage increases that match up to rising rental overheads.
"This provides some evidence that the increase in housing costs has been broadly offset by strong income growth, thereby limiting the deterioration in housing affordability for at least some renters," the RBA argues.
It is worth noting that the RBA's graph on income to rents is massively lagged.
It doesn't include recent years, especially the 10 per cent national surge in asking rents that occurred in 2022, and that is still occurring, albeit at a slower pace, as we push into 2023.
However, it does show the gap in rental affordability for those in lower-income households has only been widening over the years.
Even after adjustments for increases to rental assistance, those on lower incomes are now paying about 28 per cent of their income on rent, compared to 22 per cent for those earning more.
"Indeed, timely information suggests that financial stress for some renters has picked up over the past year,' the RBA notes.
This takes us back to that great upheaval brought on by the pandemic.
With rental vacancy rates still so low, not enough properties being built to catch up with demand, and now migration climbing back above pre-pandemic levels, we may see some of us pushed back into less spacious living.
"The outlook for average household size (AHS) is uncertain," the RBA notes.
"AHS has increased slightly since the end of 2022, possibly in response to tightness in many rental markets, particularly regional areas."
The tough pill to swallow is that, unless landlords start dropping rents significantly in response, after years of rent hikes and fewer homes being built, we may also be paying more to go back to how we were living before 2020.
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