AUSTRALIAN households with three or more families are on the rise as both related and unrelated families choose to live together to reduce growing costs.

According to the Australian Bureau of Statistics, between 2006 and 2011 the number of Australian households with three or more families increased from 29,649 to 48,507, a rise of 64 per cent. 3,495 of these households in 2011 were unrelated families living together.

The rise in households with three or more families has outstripped the number of new houses and total population growth, both which rose only 8.3 per cent.

While households with three or more families currently only make up a fraction of Australian family households at 0.3 per cent, it is a trend that experts believe will continue to grow.

Housing affordability and an increasing cost of living are major factors in this growing trend. As the size of households grew, mortgages and rent rose 38 per cent and 50 per cent respectively and necessities such as electricity, utilities and water increased by an average of 62 per cent.

Australians for Affordable Housing, a coalition of national housing, welfare and community sector organisations working to highlight the problem of housing affordability in Australia, are concerned about this trend.

Change in household income and costs, 2006-2011

Household income.................................................. 19.53pc

Mortgage...................................................................38.46pc

Rent............................................................................50pc

Electricity...................................................................72.67pc

Utilities.......................................................................67.3pc

Water & Sewage.....................................................75.94pc

"We hear of families with young children moving back in with their parents, or staying temporarily with other family members, sleeping on the floor, because they can't find an affordable place to rent," said Sarah Toohey, Campaign Manager for Australians for Affordable Housing.

Incomes have not increased at the same rate of the cost of living, rising only 20 per cent nationally, which is a problem according to Toohey.

"Housing is a basic need, but rent levels in our cities mean that low income households will have trouble finding a place that they can afford," she said.

Recent research by Anglicare found very few rentals in any capital city were affordable to people on pensions and benefits, but in Sydney and Melbourne families earning the minimum wage would struggle to find an affordable rental."

Auburn in New South Wales holds the title for Australia's most crowded suburb, with 340 households containing three or more families. It has a high number of Gen Ys starting their new lives and families in the homes of their parents and a large migrant community.

Queensland-based Vicky Va'a of the Pacific Indigenous Nations Network said that the family network is important but believes the overcrowding problem is compounded when family or friends arrive without a plan.

"Often New Zealanders will turn up with the idea that they will stay with friends or family for a few weeks and that stretches into years.

"The problem is that many are not permanent residents so therefore do not get any assistance. Jobs are casual which means you don't get paid when there is no work, savings run out and money is short so the obvious solution is to pool resources," she said.

While social analyst Mark McCrindle acknowledges the importance of family in the migrant community, with 30 per cent entering Australia under a family visa, he sees the financial pressure on the younger generation of Australians as a larger factor in the new household trend.

"Gen Y, in their late 20s and early 30s now, are starting their families in debt. They have HECs debts and credit card debts and also new costs their parents didn't have, such as broadband."

And with elderly parents choosing to move in with children rather than move into retirement villages, nursing homes or smaller properties, the Baby Boomers in the middle are becoming the "Sandwich Generation".

"They are paying more for groceries, water and electricity and are missing the opportunity to downsize as they face the burden or responsibility."

The hazard for Gen Y, according to McCrindle, is the possibility of a "safety net syndrome" as young adults fail to take responsibility for their own finances.

"If they fail to think about personal responsibility, they find themselves further behind the financial 8-ball as their lifestyle of wasting money continues through an extended adolescence."

But there is a positive side to this trend for the multi-generation households as connections between generations improve.

"There is more connectivity with family and as family is the building blocks of society, this is very important," said McCrindle.

Average Australian houses sizes have gone from two bedrooms seen half a century ago to four bedrooms today. The increasing number of people living in them does not necessarily mean conditions are becoming cramped.

But for Toohey, there is concern that families are being forced into cramped and overcrowded conditions "because they simply can't afford an alternative, and we do hear of many families in this situation".

Originally published as Soaring costs drive families together