School of the Built Environment Demand, Supply and Affordability: Review of The Numbers Professor Glen Bramley IPPR Seminar on South East.

School of the Built Environment

Demand, Supply and Affordability:Review of ‘The Numbers’

Professor Glen Bramley

IPPR Seminar on South East

School of the Built Environment

Outline of Contribution

• Overall household numbers- sources of growth- interpretation of recent trends- implications for planning South East

• Composition of demand and supply• Locational strategy• Market responses to planning changes• Affordable housing need & supply

- scale of problem- mix and cost of solutions

School of the Built Environment

Household Growth in South East

• South East high growth region for a long time

• London transformed from declining to growing

• ‘Greater S E’ taking up more of growth• Recent reduction in S E growth a ‘blip’?• Evidence of tightening land constraint

School of the Built Environment

Household Growth by Region 1971-2002

0

500

1000

1500

2000

2500

3000

3500

4000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Year

Th

ou

san

ds

School of the Built Environment

Supply isn’t RespondingNew Housing Completions, UK 1949-2002

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

year

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Year

Nu

mb

er

of

Dw

elli

ng

s c

om

ple

ted

p.a

.

private

social

School of the Built Environment

Barker’s Diagnosis

• Low and declining levels of housebuilding• Weak response of supply to prices,

-> high and volatile prices• Long run real house price rise +2.4-2.7% p a• Affordability worsening, wealth gap widening• Labour mobility & econ growth restricted• Loss of economic ‘welfare’ (e.g. smaller

houses)BUT

• To be weighed against environmental benefits of planning restrictions

School of the Built Environment

Taking Your Eye off the Ball

New Planning Permissions for Housing by Broad Region of England, 1983-2002

0

50000

100000

150000

200000

250000

300000

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Year

Ap

pro

x N

o.

of

Plo

ts p

.a.

North&Mids

South

School of the Built Environment

Migration

• Migration the dominant factor in S E growth• Strong movement from London to S E• Pressure in London from natural change &

international migration• S E now net exporter to surrounding

regions• Outflow from London increasing• But more of this going to other regions• Tight land constraint in S E diverting

migrants elsewhere

School of the Built Environment

Components of Population Change by Region

-20.0

-10.0

0.0

10.020.0

30.0

40.0

50.0

60.0

Lond

on

South

East

East E

ng

South

Wes

t

Midl

ands

North

Region/Group of Regions

Th

ou

san

ds

of

Per

son

s

Migration

Nat Change

Migration To and From South East 2002-03

-60.0-40.0-20.0

0.020.0

40.060.080.0

100.0120.0

Lond

onEas

t

South

Wes

t

East M

ids

West

Mids

North

Scot,

Wa,

NI

Region/Group of Regions

Th

ou

san

ds

of

per

son

s

From SE

Into SE

School of the Built Environment

Net Internal Migration by Region, Selected years

1996-2003

-150.0

-100.0

-50.0

0.0

50.0

North E

ast

North W

est

Yorks

& H

East M

ids

West

Mids Eas

t

Lond

on

South

East

South

Wes

t

Wales

Region

Th

ou

san

ds

of

per

son

s

1996/7

2000/1

2002/3

International Migration by Region 1992-2002

-100.0

0.0

100.0

200.0

300.0

400.0

500.0

1990 1992 1994 1996 1998 2000 2002 2004

Year

Th

ou

san

d p

erso

ns Net Eng

Net Lond

Net SE

Gross Eng

Gross Lond

Gross SE

School of the Built Environment

International Migration

• Big increase in net and gross inflows in 1990s• Data remain problematic• Many explanatory factors

- easier travel - EU expansion & integration- favourable economy – past migrations- political instability - HE sector

• London dominant destination• S E receiving 10k net, 57k gross pa (ave 10

yr)• Indirect London pressure more important

School of the Built Environment

Household Composition

• Growth mainly due to population numbers• Most of net growth is single person

households• Caution about implications for dwelling

size/type• Private sector output polarised, but mainly

larger• Social sector builds more small & flats• Arbitrary discounting of young singles

questionable

School of the Built Environment

Figure 5.1: Components of Increase in Households, England, 1971-96

(actual) & 1996-2021 (projected) (thousands)

-1000 -500 0 500 1000 1500 2000 2500

Adult Population

Age Structure

Marital Status

Household RepresentativeRates

Remainder

Com

pone

nt o

f C

hang

e

Change in Number of Households (thousands)

1996-2021

1971-96

Figure 5.3: Net Household Growth by Household Type, England 1996-

2021 (actual) vs 1971-96 (projected)

0 500 1000 1500 2000 2500 3000

Couples

Lone Parent

Multi Person

One PersonH

ouse

hold

Typ

e

Thousands per annum

1996-2021

1971-96

School of the Built Environment

Private Sector House Type and Size Mix 1991-2003

0

20

40

60

80

100

120

1991

/92

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2

2002

/03

2

2003

/04

2

Year

Per

cen

t o

f C

om

ple

tio

ns

Houses 3+br

Houses 1-2br

Flats 3+br

Flats 1-2br

Social Sector Size and Type Mix

0

20

40

60

80

100

120

1991

/92

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2

2002

/03

2

2003

/04

2

Year

Per

cen

t o

f co

mp

leti

on

s

Houses 3+br

Houses 1-2br

Flats 3+br

Flats 1-2br

School of the Built Environment

What Number to Plan For?

• SEERA consulting on range 25.5k-32k• In my view more realistic figure would be 40k• Straining credibility to see London building

48k (vs 15-19k recent actual); maybe 30k• Realistic to assign half overspill to S E

(32+9=41)• Correcting recent underperformance gives

38k• LA’s own expectations are 38k• Economically dynamic region: jobs:housing bal• Barker affordability targets will require

substantial increase in S E

School of the Built Environment

Locational Strategy

• Existing SCP focuses on Bucks & Kent• Strongest economic growth is to the west• ‘Mega-city region’ perspective also points

this way• Little apparent stomach for economic

restraint• Therefore a strong case for more planned

growth in Oxfords, Berks, Hants, W Sussex

School of the Built Environment

Market Simulation Model

• Releasing more land -> less than proportionate increase in output (e.g. 100% -> 45%)

• Implies more/larger sites built out more slowly• To counter this needs direct delivery vehicles• Large output increase gives moderate price falls

(e.g. 45%->5% in this case – maybe more…)• Concentrated in one area -> more net migration• Difficult to meet affordability goal by this route

alone

School of the Built Environment

Table 12: Housing Market Simulation Model Results: Impact of extra land release for all ‘high demand’ areas and for Hampshire alone (% difference from baseline after 5 years)

All Cat 1 HD Extra House New Vacan- In- Out- Net Land Prices Build cies Migration hprice pqpr pvac inm outm netm

15% -0.79 5.25 -0.66 0.50 2.12 -1.63 30% -1.44 11.68 0.42 1.13 2.20 -1.07 45% -2.04 17.54 1.45 1.74 2.26 -0.52 60% -2.73 24.66 2.57 2.41 2.35 0.06 75% -3.45 32.21 3.72 3.09 2.45 0.64

100% -4.66 44.96 5.65 4.23 2.61 1.62 Hampshire Extra House New Vacan- In- Out- Net Land Prices Build cies Migration hprice pqpr pvac inm outm netm

15% -0.46 8.51 -0.65 7.79 1.07 6.71 30% -1.04 14.06 0.60 8.50 0.83 7.67 45% -1.57 19.03 1.77 9.18 0.61 8.57 60% -2.20 25.29 3.10 9.94 0.35 9.59 75% -2.88 32.00 4.48 10.72 0.08 10.65

100% -4.02 43.34 6.81 12.04 -0.39 12.43 Source: author’ s simulations using Bramley & Leishman (forthcoming) model.

School of the Built Environment

Affordability, Need & Supply

• Special run of affordability model (district level)• Projection assumes some price correction• Adjustment for wealth • S E 2nd worst after London; variation within reg• Net new needs>feasible programme in S E &

London (even maximising LCHO & planning)• Current ADP<feasible prog, in south generally• Net cost of prog for S E £660m, vs ADP of £300m• Larger total build number would help bridge gap• But backlog would remain

School of the Built Environment

Table 15: Affordability: New households able to buy, adjusted for wealth, by Region and County 2002-09 (percent)

G O Region 2002 2004 2006 2009 Average NORTH 56.3 48.3 52.5 55.8 53.2 YORKS & HUMBER 57.1 48.9 53.4 56.9 54.1 NORTH WEST 56.3 48.7 53.0 56.4 53.6 EAST MIDLANDS 54.9 45.6 51.2 55.0 51.7 WEST MIDLANDS 48.9 42.0 47.4 51.2 47.4 SOUTH WEST 39.8 33.6 39.8 43.9 39.3 EAST 42.8 34.7 41.0 45.3 40.9 SOUTH EAST 37.4 32.1 38.5 42.9 37.7 LONDON 22.2 18.2 22.6 25.9 22.3 ENGLAND 44.3 37.5 42.8 46.6 42.8 S E County Area Bucks 43.6 38.2 44.8 49.2 44.0 Berks 37.1 31.8 38.3 42.7 37.5 E Sussex 32.2 27.5 33.3 37.4 32.6 Hampshire 38.4 33.1 39.5 43.8 38.7 Isle of Wight 36.1 31.2 37.3 41.5 36.5 Kent 37.8 32.5 38.8 43.1 38.0 Oxfordshire 36.4 31.0 37.5 42.0 36.7 Surrey 36.9 31.6 38.1 42.6 37.3 W Sussex 35.8 30.7 37.0 41.3 36.2 Source: author’s affordability model run for IPPR study, Jan 2005.

School of the Built Environment

New Affordable Housing Need, Feasible Programme and Current Government

Programme

05000

1000015000200002500030000

NORTH E

AST

YORKS &

HUM

BER

NORTH W

EST

EAST MID

LANDS

WEST M

IDLA

NDS

SOUTH W

EST

EAST

SOUTH E

AST

LONDON

Region

Dw

elli

ng

/ho

use

ho

ld u

nit

s p

er y

ear

NewNeed

FeasProg

NewBld

ADP

School of the Built Environment

Affordable Housing Planning Target by County & Region

0.05.0

10.015.020.025.030.035.040.045.050.0

Bucks

Berks

E Sus

sex

Hamps

hire

Isle

of W

ight

Kent

Oxfo

rdsh

ire

Surre

y

W S

usse

x

SOUTH E

AST

LONDON

EAST/SW

MID

LANDS

NORTH

% of New Build Afftarg

School of the Built Environment

Table 21: Estimated Costs of Affordable Housing Programme by Region and County 2006, £m pa(based on conservative assessment of new need ignoring backlogs and migration, maximising lender-financed Homebuy, and planning gain)

Shared Social S106 p g Net Govt ADPG O Region Homebuy Own Rent Contrib Cost 2004-06NORTH 8 9 0 2 11 43YORKS & HUMBER 20 16 15 9 33 64NORTH WEST 31 26 42 16 67 121EAST MIDLANDS 28 15 60 19 70 64WEST MIDLANDS 37 21 63 25 77 85SOUTH WEST 77 90 274 83 319 87EAST 102 121 224 84 313 109SOUTH EAST 169 282 478 184 660 297LONDON 226 403 1040 316 1241 735Total 698 982 2198 738 2791 1605 S E County AreaBucks 15 22 43 16 57Berks 21 43 68 24 98E Sussex 13 17 46 15 54Hampshire 35 54 58 28 101Isle of Wight 2 2 4 2 6Kent 25 34 90 29 107Oxfordshire 15 28 47 19 64Surrey 27 54 72 32 107W Sussex 16 25 51 19 65

School of the Built Environment

Seminar Questions

1. 40,000 a year +2. Yes, but not 1:1; case for DDVs3. (Yes, with adeq investment)4. More in growth areas to west5. (No comment)6. Broad range of working and other

households7. Both, including intermediate LCHO;

each strategy in isolation not enough.