Nearly 1.6 million UK households are spending more than half their disposable income on the ongoing costs of housing each month, according to new analysis from the independent think tank the Resolution Foundation.

Of the 1.6 million “housing pinched”, retired households and working age households in which nobody works account for just over a third (7% – 110,000 households – and 30% – 480,000 households – respectively). Leaving these two groups aside, there remain close to 1 million working households who are spending over half their disposable income on housing costs.

The new research finds that the vast majority of the housing pinched are not well off households choosing to spend a large chunk of their income on expensive homes. Just 40,000 of the working households who are housing pinched have incomes in the top fifth of the household income distribution, while 830,000 are in the bottom half, meaning 84% of the housing pinched have incomes below the national median. In 2011-12 – the latest year for which data are available – the housing pinched in the bottom half of incomes had on average just £60 left over each week to spend on all other essentials (including food and bills) after paying for accommodation.

The think tank said the housing pinched households are more likely to rent privately, be young, live alone, live in one bedroom properties, have recently moved and live in London. The proportion of the population spending more than half of their disposable income on monthly rent or mortgage payments has grown significantly since the early 2000s, despite a slowdown in the growth of this group following the financial crisis.

The analysis takes account of the support for housing costs that lower income households receive through Housing Benefit. Those who are defined as housing pinched spend more than half of their disposable income on housing even with the support offered by Housing Benefit.

The analysis also found that 11% of working London households are housing pinched (250,000) compared to 3% in the North East and Northern Ireland. Also, 12% of working households renting privately are housing pinched, while 6% of mortgagor households and 4% of social rented households are affected.

Laura Gardiner, report author and analyst at Resolution Foundation, said: “The majority of the housing pinched are in work but on low and middle incomes, leaving little left over after housing costs to spend on other essentials. With house prices and rents rising in some parts of the country, interest rates expected to start to go up and income growth remaining weak, we should be concerned about the ability of this group to absorb additional pressure on their household budgets from higher mortgage payments and rents.

“It is vital that more money is invested in the supply of new housing in order to drive down costs, otherwise we can expect to see a steady rise in the number of households that are ‘housing pinched’ over the coming years.”