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Both Paul Swinney and Ian Mulheirn generalising about housing need and supply from too narrow a perspective: both miss the inter-generational aspect. I have analysed the 2014 household projections from this angle, with interesting results:
The projected net increase in the number of households in England is 211,000 pa over the period 2011-2031. This is made up of three components:
• 363,000 pa new households formed by those under 25 in 2011 (under 45 in 2031);
• 53,300 pa additional household formed by those 25-65 in 2011 (45-85 in 2031);
• 206,000 pa fewer household formed by those 65+ in 2011 (85+ in 2031);.
The overwhelming majority of newly forming households (87%) are young. Most cannot afford to buy new homes (even ‘Starter homes’ and with assistance from ‘Help to Buy’). Meanwhile very few social rented homes are being built and the existing stock continues to be sold off. The consequence is that newly-forming households depend mainly on the cheaper end of the existing stock: the average price paid by first time buyers (£226k) is well below the general level. There is thus a serious misalignment in terms of price between housing needs and what is being built, and this extends also to numbers, tenures, and locations.
The requirement for a minimum of 5 years’ worth of land to be ‘readily available’, and for local plans to look at least 10 years ahead, means a national pipeline of land for between 1 and 2 million homes must be identified. This is a minimum, since Planning Policy Guidance also encourages additions to OAN for a wide range of local factors. Since local planning policies generally prioritise use of urban brownfield land, the additional land to provide for OAN is necessarily mostly in the form of greenfield sites .
New permissions have exceeded starts by some 50,000 pa for the last decade, and land available in planning terms (allocated in Local Plans, or with permission) for some 900,000 homes is already held by major builders. However, in spite of this, actual output has been well below projected needs since 2007. The conclusion must be that such needs exceed effective demand (purchasers or tenants able to pay market prices). In essence the planning policy for housing provision, continued by the present HWP, requires a surplus of planned provision of land above the rate at which it can viably be developed.
The effect of this is to focus development on the most profitable locations – typically higher-priced greenfield sites. These seldom if ever cover the extra costs they impose on infrastructure and services. Housing policies effectively incentivise dispersed new development, diverting limited public resources and attention from renewal of infrastructure and services within existing settlements.
This is particularly damaging to the housing choices available to new and lower-income households, who depend on buying or renting existing entry-level homes. The result is a vicious circle involving the whole housing stock. Housing policy focused on new development and transport policy focused on supporting new housing lead to more travel, more car dependency and a poorer range of housing choices for newly-forming households. Churn accounts for 90% of housing choices acts as a multiplier, in a vicious circle.