3-4 year waiting list for permanent Social Housing in Edinburgh. At last count, 4000-4500 AirBnB properties in Central Edinburgh, most of which will be small 1&2 bedroom flats, exactly the type of accommodation most lacking in a city that is absolutely full of Tenements. Just reading today about how CEC is so overwhelmed that people emergency accommodation in Hotels are going to have to be moved out for most of June and July because said Hotels are expecting a huge influx of guests for Taylor Swift concerts.
So your answer to "where are all these people?", in Edinburgh at least, is they are currently sitting in BnB's, Hotels, or HMO's, and Emergency Private Lets, leased to the Council at exorbitant costs by profiteering landlords, because profiteering landlords have bought up all the formerly affordable small-sized accommodation at prices "normal" residents can't compete with.
I'd imagine it's much the same across the UK, although Edinburgh's particular problem is exacerbated somewhat by people desperate to profit from Tourism, exploit Students, and who know that the Council will pay them ridiculous rates to house people on the waiting list in shabby tenement flats that haven't seen a paintbrush in decades.
That's before you even look at the number of old-fashioned "homeless", who are literally sleeping on the streets or in night-to-night charity beds.