How do we get to 250,000 homes a year? Neil McDonald Visiting Fellow at Cambridge Centre for Housing and Planning Research Author of What Homes Where?
We need 250,000 homes a year We can deliver 250,000 homes a year if there is the political will to do so. But, do those who need to take action believe: that 250,000 p.a. are really needed there will be serious consequences of not delivering that number it can be done.. without despoiling our green and pleasant land?
Why we need 250,000 homes a year? There are going to be that number of additional households needing homes because: our population is growing we are living in smaller households
Population growth Number of people in 10 years time will be: the number now plus: those who arrive less: those who go
Population growth Number of people in 10 years time will be: the number now plus: those who arrive: births and arrivals from abroad less: those who go
Population growth Number of people in 10 years time will be: the number now plus: those who arrive: births and arrivals from abroad less: those who go: deaths and those who go abroad
Thousands of people Population growth 800 600 Causes of population growth 54m population 400 200 0-200 -400-600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth 800 600 Causes of population growth 54m population Births 730k 400 200 0-200 -400-600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth 800 600 400 200 0-200 -400-600 Causes of population growth Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections 54m population Births 730k Deaths -460k
Thousands of people Population growth Causes of population growth 54m population 800 600 400 200 Births 730k Deaths -460k 280k 280k 0-200 -400-600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth Causes of population growth 54m population 800 600 400 200 Births 730k Deaths -460k 280k 280k 0 Migration in 690k -200-400 -600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth Causes of population growth 54m population 800 600 400 200 Births 730k Deaths -460k 280k 280k 0 Migration in 690k -200 Migration out -510k -400-600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth Causes of population growth 54m population 800 600 400 200 Births 730k Deaths -460k 280k 280k 0 Migration in 690k -200 Migration out -510k -400 180k 180k -600 Births Deaths Migration in Migration out Source: averages for 2011-21 from ONS 2011-based projections
Thousands of people Population growth Causes of population growth 54m population 800 600 400 200 Births 730k Deaths -460k 280k 280k 0 Migration in 690k -200 Migration out -510k -400 180k 180k -600 Births Deaths Migration in Migration out Growth 460k Source: averages for 2011-21 from ONS 2011-based projections
Can we trust the numbers? Births: fertility rates well understood those who will form households in the next 20 years have already been born Deaths: uncertainty small ONS has a tendency to underestimate improvements in mortality rates International migration: more uncertainty but: Government has limited room for manoeuvre reducing net migration by 60,000 (a third) only reduces housing numbers by around 30,000
How many homes do we need? We should plan to house an extra 460,000 people a year
1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 Average household size: England and Wales How many homes do 460,000 people need? 5 4 3 Household size People have been living in smaller and smaller households for at least 100 years.. 2 1 0 Source: ONS
1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 Average household size: England and Wales How many homes do 460,000 people need? 5 4 3 2 1 Household size People have been living in smaller and smaller households for at least 100 years.. until the last census when the average size hardly changed 0 Source: ONS
1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 Average household size: England and Wales How many homes do 460,000 people need? 5 4 3 2 1 Household size People have been living in smaller and smaller households for at least 100 years.. until the last census when the average size hardly changed 0 What changed? Source: ONS
Households per 1000 in age group Household growth: what changed? 500 480 460 440 420 Households formed 25-34 year olds Not much change in most age groups Big impact on 25-34 year olds: Expected: 473 households per 1000 400 380 Source: DCLG 2008 projections 2011 2011 projections
Households per 1000 in age group Household growth: what changed? 500 Households formed 25-34 year olds Not much change in most age groups 480 460 Big impact on 25-34 year olds: 440 420 400 380 Expected: 473 households per 1000 Actual: 436 per 1000 Difference > ¼ m households Source: DCLG 2008 projections 2011 2011 projections
Households per 1000 in age group Household growth: what changed? 500 480 460 440 420 400 380 Source: DCLG Households formed 25-34 year olds 2008 projections 2011 2011 projections Not much change in most age groups Big impact on 25-34 year olds: Expected: 473 households per 1000 Actual: 436 per 1000 Difference > ¼ m households Deterioration projected
Household growth: what changed? Increase in young adults living with parents: ~ ½ million between 2001 and 2011 Young adults spending longer in shared accommodation 35-44 year olds also affected Much smaller impacts on older age groups largely cancel out
Household growth: what changed? Impact is on those with lower incomes and without parental support: People setting up home on their own later Putting off having families Delaying moving up to larger home when children arrive
Households per 1000 in age group How many homes do we need? Latest official projections say 221,000 extra households a year, but: Assumes further deterioration for younger adults If 221,000 aren t delivered, things will get even worse 500 480 460 440 420 400 380 Source: DCLG Households formed 25-34 year olds 2008 projections 2011 2011 projections
What does this mean for housing markets? Large suppressed demand: if 25-44 year olds were able to set up households at the rate previously expected around 300,000 homes year would be needed. People wanting houses they can t afford doesn t build houses Effective demand depends on more and more accessible mortgage funding If effective demand increases without increased supply we re back to boom and bust
Increasing supply: can the industry build 250,000? We have built more than 250,000 a year before It will take time to build capacity
Increasing supply: impact on countryside Only 11% of England is urban Could build 250,000 homes a year for next 25 years and still build on less than 1% of what is left Plenty of greenfield sites that have little or no amenity value
Increasing supply: providing the land The Government has a cunning plan : Do away with regional plans that enabled us to: decide how many homes are needed on cross-boundary basis decide where best to put them Tell councils they must assess their own housing needs Put in place a Duty to co-operate on LAs to deal with cross-border issues
Increasing supply: providing the land The cunning plan might work if: Planning inspectors insist on genuinely objective assessments of needs: Initial signs encouraging Ministers need to back inspectors Duty to co-operate is given teeth: Duty to talk is useless What happens if councils won t agree?
Conclusions More births than deaths and a realistic view of migration mean we need 250,000 new homes a year Even that means that conditions continue to deteriorate for younger adults: 250,000 must be a minimum we plan to exceed Large suppressed demand which could lead to a return of boom and bust if access to mortgages improves without increased supply We can build the homes we need with only small greenfield land take Crucial that the planning system delivers the land needed. The cunning plan could work if Ministers back inspectors and sort the Duty to Cooperate.