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East Riding Local Housing Study Addendum Note
August 2014
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East Riding of Yorkshire Council LHS Addendum Note
Contents
Summary ...... 1 1. Introduction ...... 3 2. Consideration of alternative assumptions ...... 5 3. Consideration of latest strategy context ...... 16 4. Updated household modelling...... 21 5. Consideration of market signals ...... 36 6. Conclusions ...... 47 List of Acronyms ...... 50
Prepared By: Nicola Rigby ...... Status: Director ...... Date August 2014 ......
Reviewed By : ...... Status: ...... Date ......
For and on behalf of GVA
August 2014 I gva.co.uk East Riding of Yorkshire Council LHS Addendum Note
Summary
This Addendum Note has been prepared by GVA on behalf of East Riding of Yorkshire Council. It reflects updates to information that have been made available since the publication of the Local Housing Study in January 2014, which are relevant to be considered as part of the East Riding Local Plan Examination. The Addendum also considers representations received as part of the Local Plan process, and in response to evidence prepared by both ERYC and NLP as part of the Melton Planning Inquiry.
The note is not intended to repeat or replace the LHS, but rather sensitivity test areas of the analysis on the basis of new information where relevant.
The key information which has been updated since the publication of the LHS has included:
• 2012-based Sub-National Population Projections;
• Census 2011 data on key assumptions including economic activity rates; and
• Emerging case law of relevance to the calculation of Objectively Assessed Housing Need and defining a Local Plan housing requirement.
In addition, the Addendum takes into account the announcement made on 25 th March by Siemens and Associated British Ports that they jointly will invest £310m into Hull and the East Riding to deliver wind turbine production and installation facilities at two sites in Hull and East Yorkshire, and the updated policy and strategy position including the Hull SHMA, Joint Planning Statement (JPS) between East Riding of Yorkshire Council and Hull City Council, and the Humber Local Enterprise Partnership and York, North Yorkshire and East Riding Local Enterprise Partnership Strategic Economic Plans – all published since publication of the LHS.
The original LHS identified a housing requirement for the East Riding alone of 1,933 (2011 headship rates) to 2,229 (2008 headship rates) dwellings per annum 2012 – 2029 for the plan period. As part of this Addendum exercise this figure reduced as summarised in the bullet points below:
• Adjustment to reflect a reduced unemployment rate as part of the Melton Appeal: reducing the figures to 1,827 per annum (2011 headship rates), and 2,119 per annum (2008 headship rates);
• Adjustment to reflect the latest PopGroup methodology: changing the figures to 1,888 per annum (2011 headship rates), and 2,165 per annum (2008 headship
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rates) (NB: these figures do not assume the lower unemployment rates identified during the Melton Appeal); and
• Finally, the adjustment to reflect the latest PopGroup methodology and the latest assumptions as set out in this document: reducing the figures to 1,624 per annum (2011 headship rates), and 1,896 per annum (2008 headship rates).
However, it is still considered appropriate to plan for higher levels of housing growth across the housing market area, as set out in the JPS. This would contribute to the delivery of the NPPF, which requires Local Plans to:
• Meet objectively assessed needs, with sufficient flexibility to adapt to rapid change; and
• Boost significantly the supply of housing.
The decision in the case of Gallagher Homes Ltd / Lioncourt Homes Ltd vs Solihull MBC concluded that the final appropriate step in establishing an appropriate housing requirement is to apply any policy considerations to that figure (i.e. identifying a figure which, on policy grounds, is lower or higher than the full objectively assessed figure for housing need in that area). This is based on co-operating with adjoining or other near-by local planning authorities on the strategic matter of meeting housing requirements across the housing market area.
This supports the view of considering the East Riding dwelling requirement alongside that of Hull City Council, as outlined in the Hull SHMA, and highlighted through the recently endorsed JPS. The JPS recognises the context of housing requirements and strategy aspirations across the joint housing market area spanning the East Riding and Hull, as established through the latest evidence base and strategy documents in place across the sub-region, and consistent with the requirements of NPPF.
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1. Introduction
1.1 This Addendum Note to the January 2014 East Riding Local Housing Study (LHS) has been prepared by GVA with Edge Analytics on behalf of East Riding of Yorkshire Council.
1.2 The Addendum is required in response to the issuing of new data, and a new PopGroup model (v4) (PG4) which changes the population projection method for improved alignment with ONS methods and introduces a revised approach for modelling in-migration rates to individual areas, since the undertaking of the original study, including the consideration of the following:
• the release (on 29 th May 2014) of the 2012-based Sub-National Population Projections (SNPP) which supersede the Interim 2011-based SNPP (which only projected forward to 2021);
• economic activity rates from the 2011 Census which provide the latest profile of age-specific activity, which are used directly in the jobs-led scenario in conjunction with an updated commuting ratio from the 2011 Census and the latest unemployment rate statistics.
1.3 The Addendum note is also required to address the additional household modelling undertaken as part of the preparation of evidence to inform the Melton Planning Appeal 1 (documented within the proof of evidence of Richard Wood as part of that appeal by St Modwen).
Structure of Note
1.4 The Addendum note is structured as follows:
• Section 2: Consideration of alternative assumptions: review of alternative assumptions following review of representations put forward to the Local Plan and as part of the Melton Planning Appeal;
• Section 3: Consideration of latest strategic context: review of relevant policy and strategy released since the undertaking of the Local Housing Study;
• Section 4: Updated household modelling : summary of additional modelling undertaken since the January 2014 LHS, including explanation of why the model
1 Appeal A reference APP/E2001/A/13/2200981, Appeal B reference APP/E2001/A/14/2213944
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has been run, the assumptions applied, and the implications in terms of household projections;
• Section 5: Consideration of market signals : analysis of available data to document relevant market signals to be taken into account when considering potential requirement for additional allowance, in line with Planning Practice Guidance (PPG); and
• Section 6 : Conclusions: drawing together the implications of the proceeding sections.
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2. Consideration of alternative assumptions
Response to representations
2.1 Detailed representations have been received relating to the household requirements put forward in the Local Plan by seven separate parties. The representations received and a summary of their main objections are listed below.
• Pioneer Property Services (on behalf of a client): Requirement put forward by ERYC is too low; Requirement derived qualitatively not quantitatively; Requirement is below the upper range identified in the Local Housing Study;
• Peter Brett Associates (on behalf of a client): As for Pioneer Property Services, plus: Concern regarding re-basing of the plan period to 2012; Concern about unmet need from wider area; Requirement is skewed by historic constraints (i.e. past delivery);
• Spawforths (on behalf of a client): As for Pioneer Property Services;
• Home Builders Federation: As for Pioneer Property Services, plus: Concerned with alignment with 2011 household projections (considered ‘recessionary’); Requirement should consider backlog;
• Barton Wilmore (on behalf of various clients): As for Pioneer Property Services;
• Nathaniel Lichfield and Partners (on behalf of a client): As for Pioneer Property Services, plus: Concern that evidence does not take into account market signals; Concern that LHS is too heavily based on recessionary trends; Concerns about adjustment to economic participation; Concerns about commuting and unemployment rates; Does not consider growth scenarios; and
• GL Hearn (on behalf of a client): As for Pioneer Property Services, plus: Reliance on demographic trends; Does not take into account the effect that past undersupply has had on these trends.
2.2 The following table summarises the key assumptions made by each representation relating to population, households, migration, jobs, and affordability, and any other issues noted. It is clear from this exercise that there is no consensus view across the representations made, with a variety of interpretations and alternative approaches / assumptions put forward in comparison / as an alternative to those applied within the LHS. This has been acknowledged within the Planning Practice Guidance (PPG) which highlights that: 'Establishing future need for housing is not an exact science. No single approach will provide a definitive answer.'
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Figure 2.1 Alternative assumptions put forward as part of representations made
Contributor Assumptions Population Households Migration Jobs Affordability Other issues Pioneer None provided Property Services Peter Brett None provided Spawforths None provided HBF None provided Barton 2010 SNPP 2011 Household 2001 to Experian based No assessment No specific Wilmore (rebased to Projections (HP) 2012 MYE Hull City Plan Target of market discussion of 2011) up to 2021 and No information on specific signals backlog 2 Migration 2008 HP from assumptions used for scenario uses 2022 onwards commuting, long term unemployment, economic migration activity rates (albeit there is reference to an increase in participation of women and older persons) NLP 2011 SNPP Index - 2011 HP 2001 to Experian based Uses a range Backlog is up to 2021 and 2012 MYE Unemployment 5.1% (long of market referred to but 2008 HP from term ave 2004 to 2011 APS) signals not specifically
2 Making no allowance for backlog is supported by the appeal decision in the case of Zurich vs Westminster (2014) EWHC (Admin).
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2022 onwards Commuting – 2012 APS and addressed in Catch up – BRES figures 1.36 terms of OAN. 2011 up to 2021 and rate partially catches up with the 2011 HP thereby exceeding the Index approach GL Hearn 2010 SNPP Household 2001 to Census growth 2001 to 2011 Looks at both Reviews Unconstrained formation 2012 MYE applied. Takes into affordable backlog and its demographic increases from account second jobs by housing need effect on past scenario – 2012 reaching virtue of it being a measure and the migration increasing the mid-point of people in employment affordability of trends. migration to between the not employment market mirror that which 2011 and 2008 opportunities. housing, might have rates by 2029. Assumes rise in economic through occurred should activity and employment market signals. the housing for all age groups over 25. requirement In particular significant rises have been meet are observed for older in previous years residents and women.
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2.3 Following on from the review of the alternative assumptions put forward by the representations, the implications for the LHS have been considered.
Population
2.4 The LHS considered the 2011 Interim SNPP which was the latest set of population projections available at the time of writing. The study concluded that for East Riding the 2011-based SNPP was not a robust dataset to use because it uses a 2011 Census population figure (by age and sex) but does not update any of the underlying assumptions about fertility, mortality and migration.
2.5 Rather, the LHS utilised the 2011 Census data and published mid-year population estimates to 2021 as a basis for projecting forward, considered to be the most robust basis for East Riding based on the latest available data, in order to comply with Paragraph 159 of the NPPF.
2.6 The study considered two sensitivities within the analysis, one being a shorter term 5-yr migration trend and one a longer-term 10-yr migration trend (with the latter allowing for reduced recessionary effects being factored in to the analysis). This recognition of the need to consider the implications of the two alternative migration trends accords with the interpretation of guidance put forward by Barton Wilmore and GL Hearn, although the ultimate conclusions drawn are different.
2.7 Since undertaking the LHS, the 2012 SNPP have been published (on 29 th May 2014). This dataset has been considered as part of this Addendum exercise, documented in the following section. The 2012 SNPP does not have the same issues as a dataset as the 2011 SNPP given the latter's interim status – as documented in the LHS.
Households
2.8 On the basis of the summary presented, there is clearly no consistent view on whether the 2008 or the 2011 Sub National Household Projections (SNHP) are the most appropriate basis for projecting forward household requirements. A key sensitivity here is that the 2011 SNHP only projects forward to 2021, with alternative approaches to considering household formation rates after this date put forward within the various representations received.
2.9 The LHS included two sensitivities for each projection run, applying both the 2008 and the 2011 SNHP assumption in each case. It concluded that the 2011 SNHP as the latest available assumption should be applied, including the extrapolation of this assumption beyond 2021. One criticism of the 2011 dataset is that it is unduly weighted to trends based on a recessionary period. However, the 2011 SNHP are based on a range of data which minimises the risk of this, including: SNPP 2011, 2008-
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based marital status projections and 2011 update, Census data on household representative rates from 1971, 1981, 1991, 2001, 2011, and the Labour Force Survey from 2002 – 2010.
2.10 It is clear from the consideration of the representations that there is no fixed approach to the application of household formation rates – both before 2021 and post-2021. There does appear to be a general comment that the rates will not fully ‘catch-up’ with 2008 levels after 2021, but that they will partially. As such, the continued consideration of both 2008 and 2011 SNHP assumptions and recognition that the appropriate requirement sits within this range appears an appropriate response. However, this needs to be considered in light of local circumstances as identified in the PPG.
2.11 PPG states that “…plan makers may consider sensitivity testing, specific to their local circumstances, based on alternative assumptions in relation to the underlying demographic projections and household formation rates” (Paragraph 17, Ref ID: 017- 20140306).
2.12 Data from NOMIS indicates that household size in the East Riding has consistently fallen between 1981 and 2011 (from 2.702 to 2.286), from being above regional average to below the regional and national average. Indeed over this period as average household size has remained relatively static nationally between 2001 and 2011, in East Riding it has fallen. This data has been taken into account within the 2011 SNHP, which therefore is consistent with the longer-term trend position. To reflect the differing views on the use of 2008 and 2011 headship rates the Addendum has continued the LHS practice of considering both sensitivities within the analysis, however the conclusions drawn in the LHS favouring the 2011 figures for East Riding remain pertinent 3.
Migration
2.13 There is consistency in approach relating to assumptions around migration, with Barton Wilmore, NLP, and GL Hearn using data from the 2001 to 2012 Mid Year Population Estimates. This approach accords with the long-term migration trend considered within the LHS.
3 Applying the approach taken in South Worcestershire, which was an indexed approach, in line with the representations from NLP is not considered appropriate without looking at the particular circumstances of East Riding, which is recognised in the research paper prepared by McDonald and Williams on behalf of the RTPI: McDonald, N, and Williams, P, (2014) Planning for housing in England: Understanding recent changes in household formation rates and their implications for planning for housing in England. Critically this paper explores the wider structural influences on headship rates, and supports the need to understand the difference, look at the range, and identify the most appropriate basis considering local circumstances.
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Employment / Jobs
2.14 Both Barton Wilmore and NLP apply Experian forecasts (taking no account of second jobs) within their calculation of employment-led employment projections. GL Hearn apply employment levels in line with the growth in employment recorded between the 2001 and 2011 Census, which takes into account second jobs by virtue of being a measure of people in employment not employment opportunities.
2.15 There is no consistent approach taken to economic activity, unemployment and commuting levels across the representations made. Barton Wilmore do not provide their assumptions, NLP apply a long term unemployment average (in both their baseline and policy-on scenarios) and Annual Population Survey commuting ratio, and GL Hearn identify an increase in economic activity rates for all age groups above 25 years including significant rises for older residents and women. In particular, by applying a long term unemployment trend to both scenarios, NLP effectively do not recognise any potential for lower levels of unemployment to stem from the delivery of transformational projects in the Plan.
2.16 The approach taken in the LHS applies employment growth forecast by the Regional Econometric Model (REM), drawing on the analysis undertaken within the 2013 Employment Land Review (ELR). The LHS applies the preferred econometric model identified in the ELR, which is an adjusted REM model, which forecasts 1,001 jobs per annum over the plan period.
2.17 The LHS took a medium term unemployment rate of 5.5% (age-groups 16+) calculated from East Riding unemployment statistics for the period 2008-12 (sourced from NOMIS). This unemployment rate, which largely reflects the recessionary period, remains constant throughout the projection period.
2.18 Using 2001 Census statistics, a commuting ratio was derived as the balance between the size of the resident labour force and the number of jobs available in East Riding. The derived ratio of 1.28 for East Riding indicates that there is a net outflow of commuters. The commuting ratio was held constant throughout the projection period.
2.19 Economic activity rates for East Riding were derived from a combination of 2001 Census statistics and the latest evidence from the Labour Force Survey (via NOMIS). NOMIS data provides an average economic activity rate for the period 2008-2012 by broad age-group.
2.20 To account for an expected increase in the rate of labour force participation in the older age groups, resulting from changes to state pension age and economic activity the LHS assumes rates increasing in the following way:
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• Women aged 60-64: 40% increase by 2020
• Women aged 65-69: 20% increase by 2020
• Men aged 60-64: 5% increase by 2020
• Men aged 65-69: 10% increase by 2020
2.21 From 2020, economic activity rates are kept constant within the LHS. This approach has recently been considered by an Inspector as part of the examination of the South Worcester Development Plan with the same approach applied by Edge Analytics in that case and accepted through the examination.
2.22 Further sensitivities were run within the LHS, testing the implication of assuming a reduction in unemployment rate to 5% in line with the longer term unemployment trend for the authority, and addressing the commuting balance to show a 5% reduction in the ratio over the period, and finally a combined approach which assumes reducing unemployment and rebalancing of the commuting ratio.
2.23 The following section addresses the extent to which this approach has been updated in the Addendum exercise to take into account the latest data available, and further sensitivities run as part of the Melton Planning Appeal. Backlog
2.24 The question of whether backlog should or should not be included within the requirement figure has been raised within the representations made. The LHS, and this Addendum, do not include an allowance for backlog – which is considered to be robust based on the evidence, national guidance, and the latest case law on the matter.
2.25 There are two key points here to highlight – firstly, the original LHS covered an additional year to the East Riding Local Plan (2011/12), a year in which the number of completions in East Riding were higher than the hypothetical dwelling requirement (889 net completions compared to 887 dwellings required) and as such it was not considered appropriate to make any allowance. This Addendum note has been prepared for the period 2012 – 2029 for consistency with the Local Plan – with therefore no need to consider backlog. The consideration of backlog has been factored into the preparation of the Local Plan at various stages. In particular:
• The East Riding LHS and SHMA are based on a robust methodology and up to date information that, alongside the up to date information contained within the Hull SHMA, has been used to set a new housing requirement for the East Riding.
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• The East Riding LHS and Hull SHMA both consider the latest official population and household projections. This addresses the first view identified in the PAS guidance 4 that suggests the household projections could potentially take into account unmet need.
• The East Riding and Hull SHMAs both identify the level of housing need. Within the East Riding SHMA (Figures 7.1 and 7.2), the level of affordable housing need required to clear the waiting list backlog and meet future arising needs has been identified. This takes into account those groups in unsuitable housing, such as overcrowded households. This was based on extensive primary research conducted in 2011. This addresses the second view identified in the PAS guidance that there may be an unmet need resulting from households not being able to form.
2.26 This approach to backlog is in line with the appeal decision in the case of Zurich vs Westminster (2014) EWHC (Admin), and is therefore considered to be wholly appropriate.
Updates during Melton Planning Appeal
2.27 In the preparation of evidence as part of the Melton Planning Appeal, a further household modelling exercise was undertaken, additional to that carried out as part of the LHS.
2.28 This additional modelling adapted the assumptions underpinning the ELR adjusted REM scenario, specifically relating to the assumed unemployment rate within the model. In light of the Siemens announcement, and anticipated reduction in unemployment rates as a result, a further labour demand projection run was carried out.
2.29 This additional model assumes that the unemployment rate in the East Riding will reduce from 6.0% to 3.8% by 2031, with 3.8% being the pre-recession level for the East Riding between 2004 and 2008. The starting point of 6.0% relates to the unemployment level 2009-2012.
2.30 Importantly in the context of this assumption, since the publication of the LHS a number of key decisions have been taken which support the view of a growing local economy (and therefore a view of reducing unemployment rates in the future). In particular this relates to the Siemens and ABP announcement on 24 th March 2014 to invest £310m (jointly) into Hull and East Riding, with the intention of delivering a blade
4 Ten key principles for owning your housing number – finding your objectively assessed needs, July 2013
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manufacturing plant at Paull (Hedon Haven) in the East Riding and an assembly plant at Green Port Hull (Alexandra Dock), in addition to funding secured by the Humber LEP and the York, North Yorkshire and East Riding LEP through their respective Strategic Economic Plans.
2.31 As a result of the scale of investment planned, and significant level of job growth underpinning the ELR, a return to the pre-recession level of unemployment that is considered to be the most appropriate basis for modelling any employment-led population and household modelling exercises undertaken.
2.32 It should further be noted that the modelling does not take into account any ‘underemployment’ within the East Riding economy. ‘Underemployment’ refers to those who are employed but either wish to work more hours in their current role or who are looking for an additional job or for a replacement job which offers more hours.
2.33 Levels of underemployment have grown nationally, in part as a result of the impacts of the recession which saw increasing numbers of people working in part time rather than full time roles. Within the East Riding, full time employment decreased from 57.6% in 2001 to 53.7% in 2011 (Census), and part time employment increased from 20.6% to 22.%, both trends roughly in line with the regional and national average.
2.34 Considering this in conjunction with available research from the ONS and others 5, which identifies substantial spare capacity in the labour force, it is clear that simply focusing on unemployment could give a misleading (and under-represented) view of capacity within the labour force in the UK.
2.35 The ONS identify 6 that the number of underemployed workers has increased by 980,000 people since the start of the economic downturn in 2008. Whilst the majority of this took place between 2008 and 2009, the figure has continued to increase since 2009.
2.36 Given the economic potential of the East Riding, including through the recent Siemens / ABP announcements, and the ongoing delivery of other transformational projects identified in the ELR, it could be assumed that the underemployment rate within the area will decrease, as more job opportunities are taken up by existing residents and capacity in the labour force.
5 e.g. Bell, D N F & Blanchflower, D G (2013) Underemployment in the UK Revisited, National Institute Economic Review , No 224
6 Source: http://www.ons.gov.uk/ons/rel/lmac/underemployed-workers-in-the-uk/2012/sty-underemployed-workers- in-the-uk.html
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2.37 Critically, this would not generate an additional housing demand, as employment growth would be accommodated by an increase in the hours worked by the existing workforce. This employment growth would not require additional economically active people to migrate to the East Riding to facilitate the level of proposed job growth.
2.38 However, it is not possible to apply and model an assumption related to changes in the underemployment rate and, as a consequence, no allowance has been made for its potential impact within the Local Housing Study or this Addendum.
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3. Consideration of latest strategy context
3.1 This section summarises the local policy context which has emerged following the publication of the LHS report. The summary presented supports the conclusion that these key documents and investment decisions since the publication of the LHS, provide additional support to considering the scale and distribution of housing growth across the wider Hull Housing Market Area. It is considered particularly important to ensure housing growth is aligned with the aspirations of the LEP and the significant growth that will ensue from the Siemens announcement.
Hull Strategic Housing Market Assessment
3.2 The 2013 Hull SHMA represents the latest produced assessment at the time of writing this Addendum. Critically at this time the complete migration and travel to work dataset from the 2011 Census has not been released, in particular around the data at sub-local authority area level. Analysis at that geographical level is therefore still reliant on the 2001 Census and releases of the Annual Population Survey and NHS data records.
3.3 The Hull SHMA notes the need to prepare a SHMA which assesses full housing needs, working with neighbouring authorities where housing market areas cross administrative boundaries in order to be compliant with NPPF. It identifies (at paragraph 1.3) that the SHMA defines a ‘Hull-focused’ Housing Market Area which includes the City and the south eastern-part of the East Riding including Hessle, Willerby, Cottingham, Beverley and extending east to the Holderness Coast.
3.4 The SHMA defined sub-areas on the basis of common characteristics in regard to housing mix and socio-economic composition, or previously defined ‘policy areas’. The SHMA included a detailed programme of stakeholder engagement, including the testing of these sub-areas.
3.5 Given the recognised housing market relationship between Hull and the East Riding, it is important to consider the conclusions drawn within the SHMA around the most appropriate basis for identifying objectively assessed housing need across the market area (including both Hull and East Riding).
3.6 The Hull SHMA concludes that the most appropriate basis for identifying an OAHN figure for Hull is based on a demographic-led approach, identifying the need for 760 dwellings per annum over the 2011 – 2030 period. Given the timings of the Hull SHMA it is important to note that this figure does not take into account the latest 2012 SNPP (which projects a lower level of population growth across the City).
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3.7 The SHMA notes that the OAHN has been reached in alignment with the East Riding LHS including through the common application of assumptions around migration and commuting trends. Critically it also states that it does not make policy decisions regarding the future distribution of housing provision, with any adjustments to housing provision to be made (based on policy aspirations) and agreed by the two authorities through the duty to co-operate and with their respective plans.
Joint Planning Statement for Hull and East Riding
3.8 Following on from the final point made in relation to the future distribution of housing provision across the Hull HMA within the Hull SHMA, it is relevant to highlight the Joint Planning Statement (JPS) for Hull and East Riding which was endorsed by East Riding of Yorkshire Council Cabinet on 25 th March 2014 and Hull City Council Cabinet on 19 th May 2014.
3.9 The JPS covers both administrative areas but with a focus on the City and those parts of the East Riding that has a strong functional relationship to the City. The JPS provides the most up to date joint strategic planning approach between the two authorities.
3.10 The JPS highlights the important functional relationship of the Hull HMA and the Hull travel to work area and the significance of regeneration priority and renewal areas in Hull.
3.11 For the combined area, three strategic outcomes are identified in the JPS. These relate to: the regeneration of Hull and the creation of strong and sustainable communities across the East Riding; realising the potential of the Humber Ports and the growth of the renewable and low carbon energy sector; and, protecting the internationally important environmental and biodiversity designations around the Humber Estuary.
3.12 Key strategic principles are set out in the JPS and include:
Roles of places and strategic patterns of development
• transform Hull as a city of regional importance and as a focus for new development and investment to create a place where people choose to live, work and spend their leisure time.
Housing development
• support a balanced housing market which helps to transform residential areas experiencing low demand, particularly within Hull, to create a better mix of
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housing and deliver a high quality residential offer across the whole housing market.
• manage the scale and distribution of housing development across the Hull HMA, especially in relation to the adjoining settlements of Cottingham, Anlaby, Willerby, Kirkella and Hessle, in a way which supports housing regeneration and meets housing needs within the City. To support housing market renewal in the City, housing growth in the East Riding of Yorkshire part of the Hull HMA will be limited to around 45% of the total East Riding requirement.
3.13 The key strategic principles reflect and re-affirm the longstanding and agreed strategic approach between Hull City Council and East Riding of Yorkshire Council developed through the Joint Structure Plan (adopted June 2005) and the Yorkshire and Humber Plan, the Regional Spatial Strategy (published May 2008).
Humber Strategic Economic Plan
3.14 The East Riding of Yorkshire is located within the Humber LEP area. Within the Humber LEP Strategic Economic Plan (SEP), the housing market areas covering the sub-region are identified and considered.
3.15 The SEP notes that market conditions across the Humber tend to vary widely. However, with specific reference to East Riding the SEP provides that ‘There is, however a strong relationship between housing markets in Hull and nearby parts of East Riding’.
3.16 Within Section 8 of the SEP, the LEP set out their objective to make the sub-region a ‘great place to live and visit’. In particular the SEP notes the aspiration to “ensure that the Humber is a great place to live with the range and quality of homes for a growing workforce, with an attractive and vibrant cultural, leisure and visitor offer”.
3.17 Strategic Priority GP1 is “deliver the market and affordable homes necessary to support a growing number of households and to attract and retain the range of people necessary to support the economic ambitions of the Humber.” This priority supports taking an economic-led approach to housing growth across the sub-region.
3.18 Strategic Priority GP3 is to “develop a programme of regeneration activity to continue to transform and reposition neighbourhoods with poor quality urban fabric to ensure they have a sustainable future role.” This priority supports an approach to managing housing growth within the East Riding and increasing housing development within the City. It is also underpinned by significant levels of investment (£542.29m), which have been set out in the LEP Investment and Delivery Plan.
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York, North Yorkshire and East Riding Strategic Economic Plan
3.19 The East Riding of Yorkshire also falls within the York, North Yorkshire and East Riding LEP (YNYER LEP) area. Within the YNYER LEP Strategic Economic Plan (SEP), the housing market areas covering the sub-region are identified and considered.
3.20 For East Riding, the SEP recognises the inextricable links with both Hull and York through migration and travel to work patterns, with the resulting need to consider their spatial aspirations and the implications this may have for the authority area.
3.21 The SEP further notes the findings of the 2009 Hull SHMA (the latest SHMA was not available at the time of preparation of the SEP), which recognised the interrelated nature of the Hull and East Riding housing and employment markets and that the Hull housing market spans both authorities. The 2009 SHMA noted the historic outflow of households from Hull to East Riding which requires intervention to re-balance the markets 7.
Siemens announcement
3.22 On 25 th March 2014, Siemens and Associated British Ports (ABP) announced that they jointly intend to invest £310m into Hull and the East Riding to deliver wind turbine production and installation facilities at two sites in Hull and East Yorkshire.
3.23 These plans include a £160m investment by Siemens in wind turbine production and installation facilities at 2 sites in East Yorkshire and Hull – a blade manufacturing plant at Paull (Hedon Haven) in the East Riding (550 jobs), and an assembly plant at Green Port (Alexandra Dock) in Hull (450 jobs). ABP is investing a further £150m in the Green Port Hull development to develop supply chain opportunities.
3.24 The importance of this investment within the Hull and East Riding area has been recognised from the national level to the local. The Government has fully supported the Humber region’s aspirations to become an internationally significant hub for the offshore wind sector and the Prime Minister, David Cameron, has been directly involved in securing a favourable investment decision. The Secretary of State for Communities and Local Government has also backed the plans with millions of Regional Growth Fund (RGF) monies to ensure the infrastructure is in place to embed the supply chain locally which includes having suitable oven ready employment sites to accommodate investment from all levels of the supply chain.
7 Taken from Page 76 of the York, North Yorkshire and East Riding LEP Strategic Economic Plan.
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3.25 In order to help unlock the potential of the Humber ‘Energy Estuary’, of which the Siemens investment forms a critical part, the Council, and the three other unitary authorities in the sub region, have worked with the Government and the Humber LEP to develop the City Deal for Hull and Humber, confirmation of which was announced in December 2013. The focus of the City Deal will be to ensure that the local workforce has the skills and ability to access new employment opportunities and that the natural resources of the Humber enable economic growth.
3.26 The Siemens announcement which affects employment land and sites in both Hull and the East Riding, and which will create new jobs and improve skills directly and through supply chain activities, will not only have an economic impact but also affect housing demand in both the City of Hull and the wider East Riding area. The Humber LEP SEP identifies investment in skills as being a key part of the vision for the sub-region. In particular this includes a skills system that is better aligned with the current and future needs of the sub-regional economy. Critically, this investment in skills will help local residents access employment opportunities – which means that economic growth will not necessarily have a direct impact on demand for new housing or require an additional level of in-migration into the area.
3.27 The scale and location of the Siemens investment further supports and emphasises the on-going relationship between the Hull and East Riding housing market areas.
Employment Land Review Addendum Note
3.28 An Employment Land Review Addendum Note was published by ERYC in April 2014 following the announcement made by Siemens and ABP on 25 th March 2014
3.29 The ELR Addendum Note further emphasises the importance of considering the jobs generated under the additional labour demand scenario included within the ELR – giving greater confidence in the conclusions drawn.
3.30 In particular it notes that this investment announcement is a significant shift from historic economic activity within East Riding, and that it is above and beyond historic rates of activity / trends, and that it directly delivers transformational projects identified in the additional labour demand scenario within the ELR. This ELR Addendum note did not include additional modelling or changes to the preferred econometric model, given that that scenario did include investment within the energy industries at least in part (including for example investment at Paull).
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4. Updated household modelling
Updates as part of Addendum Note
4.1 As outlined in the introduction, one of the key reasons for preparing this Addendum exercise is the availability of new data not released at the time of undertaking the LHS. Further to this, following the consideration of representations put forward as part of the Proposed Submission Local Plan consultation process there is an identified need to consider the assumptions underpinning the calculations carried out to establish an appropriate housing requirement for East Riding over the plan period.
4.2 As a result a number of re-runs and additional scenarios have been run as part of the Addendum exercise including:
• Running the original scenarios through the new PG4 model including the ‘5yr migration trend’, ‘10yr migration trend’, and ‘Combined adjusted employment- led REM’ scenarios;
• Projections based on the 2012 SNPP applying a blend of old and where appropriate new assumptions (summarised below), using the PG4 model; and
• Running the preferred scenario from the LHS (the ‘Combined adjusted employment-led REM’) applying a blend of old and where appropriate new assumptions (summarised below), using the PG4 model.
4.3 The following text summarises the new assumptions applied within the Addendum exercise. Where new assumptions are not set out, the same assumptions as in the LHS have been applied.
Forecasting methodology – POPGROUP 4
4.4 The latest development in the POPGROUP suite of demographic models is POPGROUP v.4, which was released in January 2014, following the completion of the LHS. A number of changes have been made to the POPGROUP model to improve its operation and to ensure greater consistency with ONS forecasting models.
4.5 The most significant methodological change relates to the handling of internal migration in the POPGROUP forecasting model. The level of internal in-migration to an area is now calculated as a rate of migration relative to a defined ‘reference population’, rather than as a rate of migration relative to the population of an area itself (as in POPGROUP v3.1). This approach ensures a closer alignment with the ‘multi- regional’ approach to modelling migration that is used by ONS.
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4.6 Further detail on the POPGROUP methodology is available on the POPGROUP website: www.ccsr.ac.uk/popgroup/index.html .
Unattributable population change (UPC)
4.7 The 2011 Census has resulted in the ‘recalibration’ of previous mid-year population estimates. For ERY, the 2011 Census suggested that previous mid-year population estimates over-estimated the scale of growth since the previous Census, as illustrated on the following chart.
4.8 As births and deaths are robustly recorded through vital statistics registers and internal migration is adequately measured through the process of GP registration, it is considered to be most likely that the ‘error’ in the figures is associated with the mis- estimation of immigration and emigration impacts at the local level. Any issues with the data accuracy of the 2001 and 2011 Census’ are more difficult to prove.
4.9 On the assumption that births, deaths and internal migration have been robustly measured (and that the 2001 Census provided a robust population count for ERY), the downward ‘adjustment’ that resulted from the mid-year population estimate revisions is predominantly associated with the mis-estimation of international migration.
Figure 4.1: ERY Mid-Year Population Estimates
Source: ONS, 2014
4.10 The result of the mid-year population estimate recalibration for ERY is that birth and death totals (and therefore natural change) remain largely unaltered. Small changes to internal migration are evident but not substantial. ONS has not explicitly assigned the mid-year estimate adjustment to international migration. Instead it has identified
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an additional ‘unattributable population change’ (UPC) component, suggesting that it has been unable to accurately identify the source of the 2001-11 over-count.
Figure 4.2: ERY components of change, 2001/2 – 2011/12 (separated UPC)
Source: ONS, 2014
4.11 For demographic analysis, the classification of the UPC is unhelpful, but given the robustness of births, deaths and internal migration statistics compared to international migration estimates, it is assumed that it is most likely to be associated with the latter. With an assumption that the UPC component is assigned to international migration (for estimates to 2011) and with the inclusion of statistics from the 2012 mid-year population estimate from ONS, an eleven-year profile of the ‘components of change’ for ERY is presented.
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Figure 4.3: ERY components of change, 2001/2 – 2011/12
Source: ONS, 2014
4.12 These historical migration statistics have been used to derive assumptions on future migration change in the trend scenarios. In the jobs-led scenarios, migration flows are used to balance the relationship between anticipated jobs growth and the size of the resident labour force (taking account of assumptions on economic activity, unemployment and commuting). Therefore, no further allowance for UPC needs to be applied to the modelling contained within the Addendum.
Internal migration
4.13 In all scenarios, historical mid-year to mid-year counts of in- and out-migration by five year age group and sex from 2001/02 to 2011/12 have been sourced from the ‘components of change’ files that underpin the ONS mid-year population estimates. The original source of these internal migration statistics is the Patient Register Data Service (PRDS), which captures the movement of patients as they register with a GP. This data provides an accurate representation of inter-area flows, albeit with some issues with regard to potential under-registration in certain age groups (young males in particular).
4.14 In the ‘SNPP-2010’ and ‘SNPP-2012’ scenarios, future counts of internal migrants are specified, to ensure consistency with the 2010-based and 2012-based official forecasts.
4.15 The ‘Jobs-led 1001 pa’ scenario calculates its own internal migration assumptions to ensure an appropriate balance between the population and the target number of jobs that is defined in each year of the forecast period. A higher level of net internal migration will occur if there is insufficient population and resident labour force to meet
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the forecast number of jobs. In the jobs-led scenario, the profile of internal migrants is defined by an age-specific migration rate (ASMigR) schedule derived from the ONS 2012-based SNPP.
4.16 Rather than the schedule of rates being applied to the area-specific population – as is the case with the other components (i.e. births, deaths and international migration) – in the case of internal in-migration the ASMigR schedule of rates is applied to an external ‘reference’ population (i.e. the population ‘at-risk’ of migrating into the area).
4.17 In the case of East Riding of Yorkshire, the reference population is derived through an analysis of migration into the two Local Enterprise Partnerships (LEPs) that East Riding is a member of: the Humber LEP and the York, North Yorkshire & East Riding LEP. The reference population is defined by considering the areas which have historically contributed the majority of migrants into the two LEP areas. In this case, the reference population comprises all districts which cumulatively contributed 70% of migrants into the combined LEP area in 2008/09–2011/12.
Economic Activity Rates
4.18 Economic activity rates by five year age group (ages 16-74) and sex have been derived from 2001 and 2011 Census statistics. The 2011 Census statistics include an open-ended 65+ age category, so economic activity rates for the 65–69 and 70–74 age groups have been estimated using a combination of Census 2011 tables, disaggregated using evidence from the 2001 Census. Between 2001 and 2011, the rates are linearly interpolated.
4.19 For East Riding of Yorkshire, rates of economic activity increased for all age groups between 20-74 between the 2001 and 2011 Censuses (Figure 3), most noticeably for women.
Commuting Ratio
4.20 The commuting ratio, together with the unemployment rate, controls the balance between the number of workers living in a district (i.e. the resident labour force) and the number of jobs available in the district.
4.21 A commuting ratio greater than 1.00 indicates that the size of the resident workforce exceeds the number of jobs available in the district, resulting in a net out-commute. A commuting ratio less than 1.00 indicates that the number of jobs in the district exceeds the size of the labour force, resulting in a net in-commute.
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4.22 Using a combination of statistics from the 2011 Census (including ‘Workday Population’ statistics), a commuting ratio of 1.20 for East Riding of Yorkshire has been derived by Edge Analytics (Figure 4.4). The derived 2011 commuting ratio is shown below, presented alongside the 2001 commuting ratio for comparison.
Figure 4.4: Commuting ratio comparison
2001 2011 Census Census Workers A 146,687 153,451 Workday Population 308,810 Jobs B 114,260 128,082 Commuting Ratio A/B 1.28 1.20
4.23 A further sensitivity test has been conducted, whereby the commuting ratio has been gradually reduced over the course of the projection period from 1.20 to 1.15.
4.24 The pattern of development that the JPS is seeking to achieve should result in a more sustainable balance of employment and housing growth with a focus on the urban area of Hull. The City of York has a planning strategy that aims to meet York’s housing and economic needs within its administrative area. The level of out-commuting from the East Riding to both York and Hull should therefore reduce, supporting this assumption of a reducing commuting ratio.
Vacancy Rate
4.25 The relationship between households and dwellings is modelled using a ‘vacancy rate’, sourced from the 2011 Census.
4.26 A vacancy rate of 4.6% for East Riding of Yorkshire has been applied, fixed throughout the forecast period.
4.27 This vacancy rate is higher than that recorded in 2001, but only marginally (0.4% higher), and as such is not considered an unreasonable assumption to apply within the modelling exercise.
4.28 Using this vacancy rate, the ‘dwelling requirement’ of each household growth trajectory has been calculated.
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4.29 This assumption is higher than the 3% assumed in the original LHS, but is considered reliable as it is based on the latest data available at the time of preparing this Addendum.
Unemployment Rate
4.30 As previously stated at paragraph 2.26 of this report, in the preparation of evidence as part of the Melton Planning Appeal, a further household modelling exercise was undertaken, additional to that carried out as part of the LHS.
4.31 This additional modelling adapted the assumptions underpinning the ELR adjusted REM scenario, specifically relating to the assumed unemployment rate within the model. In light of the Siemens announcement, and anticipated reduction in unemployment rates as a result, a further labour demand projection run was carried out.
4.32 This additional model assumes that the unemployment rate in the East Riding will reduce from 6.0% to 3.8% by 2031, with 3.8% being the pre-recession level for the East Riding between 2004 and 2008. The starting point of 6.0% relates to the unemployment level 2009-2012.
4.33 On the basis of the recent investment decisions and the ongoing delivery of the transformational projects within the preferred REM scenario in the ELR, it is considered that there is sufficient justification to suggest that this rate of 3.8% unemployment is an appropriate level to plan to.
Comparison of outputs
4.34 The following tables summarise the outputs from the various models considered within the LHS, the proof of evidence of Mr Richard Wood prepared as part of the Melton Planning Appeal Inquiry, and this LHS Addendum exercise. The first set of tables (Figures 4.5 to 4.9) show forecast change in population under each model, and the second set (Figures 4.10 to 4.14) show the forecast change in households under each model, applying the 2008 and 2011 headship rates as outlined in the previous section.
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Figure 4.5: Projected population – Original LHS
Number of Persons Annual average Change in change 2012 Population - 2029 (17 Scenario 2012 2029 2012 - 2029 years) 5yr migration trend 335,887 347,319 11,432 673 10 yr migration trend 335,887 362,900 27,013 1,589 Employment led ELR REM 335,887 420,087 84,200 4,953 Combined adjusted employment led ELR REM 335,887 405,833 69,946 4,114
Figure 4.6: Projected population – Additional Sensitivity during Melton Inquiry
Number of Persons Annual average Change in change 2012 Population - 2029 (17 Scenario 2012 2029 2012 - 2029 years) Combined adjusted employment led ELR REM – Melton Inquiry assumptions 335,887 400,985 65,098 3,829 NB: Sensitivities applied: reduction of unemployment rate to 3.8%, reduction of commuting ratio to 1.15.
Figure 4.7: Projected population - Original LHS PopGroup v4
Number of Persons Annual average Change in change 2012 Population - 2029 (17 Scenario 2012 2029 2012 - 2029 years) 5yr migration trend 335,887 356,237 20,350 1,197 10yr migration trend 335,887 371,294 35,407 2,083 Combined adjusted employment led ELR REM 335,887 402,646 66,759 3,927 NB: For assumptions around PopGroup v4 reference paragraphs 4.4 – 4.6 of this document.
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Figure 4.8: Projected population – Addendum Models with updated assumptions
Number of Persons Annual average Change in change 2012 Population - 2029 (17 Scenario 2012 2029 2012 - 2029 years) SNPP 2012 – new assumptions 335,887 361,194 25,307 1,489 Combined adjusted employment led ELR REM – new assumptions 335,887 389,755 53,868 3,169 NB: New assumptions summarised in paragraphs 4.4 – 4.29 of this document.
4.35 In addition, a further model has been run as part of this Addendum exercise, to respond to representations made, considering the population, household and dwelling implications of the baseline REM employment growth taken from the ELR (339 jobs per annum over the plan period), applying the original assumptions applied in the LHS within PopGroup v4.
Figure 4.9: Projected population – Addendum Baseline ELR Model – Original LHS Assumptions, PopGroup v4
Number of Persons Annual average Change in change 2012 Population - 2029 (17 Scenario 2012 2029 2012 - 2029 years) Baseline REM 335,887 388,188 52,301 3,077
4.36 The original LHS identified a range of population projections from 703 per annum over the plan period (5yr migration trend based) and 4,745 (employment led ELR REM), reduced to 3,953 under the Combined adjusted employment-led ELR REM model. The preferred scenario in the LHS was the Combined adjusted employment-led ELR REM model. These figures have been adjusted in this Addendum to cover the period 2012 – 2029 to: 673 per annum over the plan period (5yr migration trend based) and 4,953 (employment led ELR REM), reduced to 4,114 under the combined adjusted employment-led ELR REM model.
4.37 The preferred scenario in the LHS was considered further within the Proof of Evidence of Mr Richard Wood as part of the Melton Planning Appeal Inquiry. As a result of the adjusted assumptions applied as part of that exercise (see paragraph 4.32 above), the population growth forecast under the Combined adjusted employment-led ELR
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REM reduced to 3,684 per annum over the plan period. This reduced unemployment level is considered to be relative robust on the basis of recent investment announcements and their likely impact on economic activity within the East Riding.
4.38 Applying the latest assumptions and PG4 to this scenario has resulted in a further reduction in forecast population growth over the plan period, to 3,077 per annum.
4.39 The following tables set out the household implications of these models, applying both the 2008 and 2011 household projection assumptions.
Figure 4.10: Projected households – Original LHS
SNHP Number of Households Annual average Change in change Households 2012 - 2029 Scenario 2012 2029 2012 - 2029 (17 years) 2008 144,176 158,756 14,580 858 5yr migration trend 2011 144,091 154,474 10,383 611 2008 144,176 166,368 22,192 1,305 10 yr migration trend 2011 144,091 161,914 17,823 1,048 Employment led ELR 2008 144,176 186,325 42,149 2,479 REM 2011 144,091 181,225 37,134 2,184 Combined adjusted 2008 144,176 180,962 36,786 2,164 employment led ELR 2011 REM 144,091 176,000 31,909 1,877
Figure 4.11: Projected households – Additional Sensitivity during Melton Inquiry
SNHP Number of Households Annual average Change in change Households 2012 - 2029 Scenario 2012 2029 2012 - 2029 (17 years) Combined adjusted 2008 144,176 179,143 34,967 2,057 employment led ELR 2011 REM – Melton Inquiry assumptions 144,091 174,255 30,164 1,774
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Figure 4.12: Projected households - Original LHS PopGroup v4
SNHP Number of Households Annual average Change in change Households 2012 - 2029 Scenario 2012 2029 2012 - 2029 (17 years) 2008 144,176 162,612 18,436 1,085 5yr migration trends 2011 144,091 158,501 14,410 847 2008 144,176 169,577 25,401 1,494 10yr migration trends 2011 144,091 165,310 21,219 1,248 Combined adjusted 2008 144,176 179,902 35,726 2,102 employment led ELR 2011 REM 144,091 175,258 31,167 1,833
Figure 4.13: Projected households – Addendum Models with updated assumptions
SNHP Number of Households Annual average Change in change Households 2012 - 2029 Scenario 2012 2029 2012 - 2029 (17 years) 2008 144,176 164,094 19,918 1,172 SNPP 2012 2011 144,091 159,878 15,787 929 Combined adjusted 2008 144,176 174,996 30,820 1,813 employment led ELR REM 2011 144,091 170,488 26.397 1,553
Figure 4.14: Projected households – Addendum Baseline ELR Model – Original LHS Assumptions, PopGroup v4
SNHP Number of Households Annual average Change in change Households 2012 - 2029 Scenario 2012 2029 2012 - 2029 (17 years) 2008 144,176 174,401 30,225 1,778 Baseline REM 2011 144,091 169,910 25,819 1,519
4.40 The following tables convert these household projections to dwelling requirements (annual) applying the 4.6% vacancy rate stated previously, taken from the 2011 Census. This is with the exception of the original LHS and the model run during the
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Melton Inquiry which assumed a lower 3% vacancy rate, in the absence of 2011 Census data.
Figure 4.15: Projected dwelling requirement (Annual) - Original LHS
Annual Vacancy Annual average Rate dwelling household requirement change (2012 – 2029) 2012 - 2029 (17 Scenario years) 2008 858 3% 884 5yr migration trends 2011 611 3% 629 2008 1,305 3% 1,344 10yr migration trends 2011 1,048 3% 1,079 2008 2,479 3% 2,553 Employment led ELR REM 2011 2,184 3% 2,250 Combined adjusted 2008 2,164 3% 2,229 employment led ELR REM 2011 1,877 3% 1,933
Figure 4.16: Projected dwelling requirement (Annual) – Additional Sensitivity during Melton Inquiry
Annual Vacancy Annual average Rate dwelling household requirement change (2012 – 2029) 2012 - 2029 (17 Scenario years) Combined adjusted 2008 2,057 3% 2,119 employment led ELR REM 2011 – Melton Inquiry assumptions 1,774 3% 1,827
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Figure 4.17: Projected dwelling requirement (Annual) - Original LHS PopGroup v4
Annual Vacancy Annual average Rate dwelling household requirement change (2012 – 2029) 2012 - 2029 (17 Scenario years) 2008 1,085 3% 1,118 5yr migration trends 2011 847 3% 872 2008 1,494 3% 1,539 10yr migration trends 2011 1,248 3% 1,285 Combined adjusted 2008 2,102 3% 2,165 employment led ELR REM 2011 1,833 3% 1,888
Figure 4.18: Projected dwelling requirement (Annual) – Addendum Models with updated assumptions
Annual Vacancy Annual average Rate dwelling household requirement change (2012 – 2029) 2012 - 2029 (17 Scenario years) 2008 1,172 4.6% 1,226 SNPP 2012 2011 929 4.6% 972 Combined adjusted 2008 1,813 4.6% 1,896 employment led ELR REM 2011 1,553 4.6% 1,624
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Figure 4.19: Projected dwelling requirement (Annual) - Addendum Baseline ELR Model – Original LHS Assumptions, PopGroup v4
Annual Vacancy Annual average Rate dwelling household requirement change (2012 – 2029) 2012 - 2029 (17 Scenario years) 2008 1,778 3% 1,831 Baseline REM 2011 1,519 3% 1,565
4.41 The analysis included in the proceeding tables has included a significant number of variant models. Some key headline conclusions include:
• The adjustment of the original LHS figures in Figure 4.15 to reflect the period 2012 to 2029, increasing annual dwelling requirements for all models, although relatively marginally, with the exception of the 5-yr migration trends as a result of this adjustment. The result of this exercise for the preferred model from the original LHS is an increased annual dwelling requirement of 1,933 dwellings per annum 2012 – 2029 (combined adjusted employment led ELR REM).
• The adjustment of the additional combined adjusted employed led ELR REM model considered as part of the Melton Appeal (including reduced commuting ratio and reduced unemployment rate) reducing the 1,933 dwellings per annum requirement to 1,827 per annum for the period 2012 – 2029.
• Within Figure 4.17 the impact of the new PopGroup v4 has been tested against the original LHS conclusions. Using the 2012 – 2029 figures for consistency, it can be seen that the latest PopGroup methodology has a downwards effect on housing requirements within the employment-led model – reducing the preferred model requirements from the original LHS from 1,933 dwellings per annum (2012 – 2029) to 1,888 per annum over the same period.
• Within Figure 4.18 the impact of the latest assumptions on the preferred model requirements from the original LHS, in addition to the latest PopGroup methodology can be seen, reducing the requirement from 1,933 dwellings per annum (2012 – 2029) to 1,624 per annum over the same period.
• Finally, for completeness, the baseline REM model assumes an annual job growth of 339 FTEs per annum, and results in an annual dwelling requirement of 1,565 per annum 2012 – 2029 (2011 headship rates), a figure which is notably close to the
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combined adjusted employment led ELR REM (1,624 per annum) (latest assumptions, as set out in figure 4.18). This highlights the importance of variations to the unemployment and commuting ratio, on the dwelling requirement. This is considered to represent the Objective Assessed Need for housing in the East Riding alone, as defined through paragraph 37 of (1) Gallagher Homes Limited (2) Lioncourt Homes Limited v Solihull Metropolitan Borough Council [2014] EWHC 1283 (Admin). It is a policy-off projection of housing growth and does not assume any future changes to unemployment or commuting rates.
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5. Consideration of market signals
5.1 The PPG advises that the household projections are the “starting point” for an assessment of full, objectively assessed housing needs (reference ID: 2a-015- 20140306), but sets out that several other issues should be taken into account, including market signals. In particular, it states that:
“The housing need number suggested by the household projections (the starting point) should be adjusted to reflect appropriate market signals, as well as other market indicators of the balance between the demand for and supply of dwellings. Prices or rents rising faster than the national/local average may well indicate particular market undersupply relative to demand.” (ID ref: 2a-019-20140306; emphasis added)
5.2 A review of appropriate market signals is therefore required to establish the relative housing demand in particular areas. Where relative demand is high, the PPG states that Local Planning Authorities (LPAs) should apply:
“…an upward adjustment to planning housing numbers compared to ones based solely on household projections.” (ID ref: 2a-020-20140306; emphasis added)
5.3 The LHS considered market signals within Section 4, including the supply of new housing and the housing market (transactions, average house prices, affordability, vacancy rates, overcrowding / under-occupation), in accordance with the requirements of guidance. This was set in the context of the existing East Riding SHMA which was based on extensive primary research from the East Riding Housing Needs Survey (January / February 2011).
5.4 In order to ensure that the market signals considered alongside the OAHN exercise is as up-to-date as possible, the Addendum exercise has included an update to that within the LHS, based on the latest data available at the time of writing.
Scope of Assessment
5.5 To establish the relative demand within East Riding, it is necessary to compare the market signals for it to the average:
• Within other LPAs with which East Riding has a functional relationship;
• Across the Yorkshire and Humber region; and
• Across England.
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5.6 In respect of the first point above, there is a significant body of evidence in place which supports the definition of the Hull Strategic Housing Market Area to include parts of the East Riding. This is clearly acknowledged in both the East Riding and the Hull SHMAs respectively.
5.7 The extent of the Hull Housing Market Area (HMA) was first identified in 2006, by DTZ as part of the development of the now abolished Yorkshire and Humber Regional Spatial Strategy. The DTZ analysis focused on household and travel to work movements and employment patterns.
5.8 Subsequent analysis by the Centre for Urban and Regional Development Studies (CURDS) on behalf of the Department of Communities and Local Government (2010) confirm this geography. This analysis focuses on containment rates – including commuting and migration containment.
5.9 The East Riding SHMA also recognises a relationship with the York Housing Market Area to the north, which should also be considered within the market signals analysis. However, a greater weight can be assumed for the relationship with Hull given over 50% of the East Riding population falls within that market area.
Methodology
5.10 The PPG suggests a range of potential market signals for assessment, albeit the list is not exhaustive. Figure 5.1 identifies the market signals which have been considered by this assessment and the key data sources which have been used.
Figure 5.1: Identification of market signals and data sources for assessment
Market Signal Data Source Mean annual house prices based on Land Registry House prices data (CLG statistics, Table 585) Private rental market statistics (Valuation Office Rents Agency) Ratio of lower quartile house prices to lower quartile Affordability earnings (CLG statistics, Table 576) Annual property sales based on Land Registry data Housing market activity (CLG statistics, Table 588) as a percentage of dwellings stock (Census 2011) Vacancy rate Vacant dwellings data (CLG statistics, Table 615) Overcrowding Occupancy rating data(Census 2001 and 2011)
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Dwelling stock data (Census 2001 and 2011) Rate of housing delivery LPA Annual Monitoring Reports
5.11 The PPG suggests that land prices could also be an appropriate market signal for consideration. However, there is no centralised or readily available source which provides comparable data for specific LPAs regarding residential land valuation. It is therefore not included in this assessment.
House Prices
5.12 The average house price across the East Riding, Kingston upon Hull and York market areas is £156,505 with average prices ranging from £98,330 in Kingston Upon Hull to £208,983 in York. This indicates to some extent that there are significant disparities in the scale of demand across the LPAs.
5.13 The average house price in East Riding is £162,203. This is circa 3.6% higher than the average across East Riding, Kingston upon Hull and York and is the median house price across the LPAs after York (£208,983) similarly, the average house price in East Riding is approximately 6.3% higher than the Yorkshire and Humber average and yet 33.1% lower than the national average price (£242,494). This indicates that demand in East Riding is reasonably high when compared to the region although weaker than that experienced at the national level.
5.14 It is important to note that there is a wide range of house prices across the various housing market areas identified. This is to be expected, and highlights that there are areas of relative high demand (in the East Riding and York), and lower demand (in Hull).
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Figure 5 .2: Average House Prices (2013)
Source: Land Registry (CLG Table 585 - Mean house prices)
5.15 All LPAs have seen increasing house prices between 2000 and 2013, with East Riding experiencing a 128.93% rate of growth over this period which is lower than the average rate (136.60%) across the wider East Riding, Kingston upon Hull and York area . However, this rate of growth is not dissimilar to that felt at the regional level (132.08% growth) and is in fact higher than the national average (119.27%) .
5.16 Since the onset of the economic downturn in 200 7/2008, house prices have generally trended downwards. In particular, East Riding has experienced a 7.03% decrease which is a greater decrease than both the average across East Riding, Kingston upon Hull and York (-3.45%) and the regional average ( -3.56%) , and indeed the national average where an increase of 8.93% was experienced.
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Figure 5 .3: House price change 2000 – 2013
Source: Land Registry (CLG Table 585 - Mean house prices)
Rents
5.17 As shown in Figure 5 .4, average monthly rents (privately rented) in East Riding are £493, which is circa 8.36% below the average across East Riding, Kingston upon Hull and York (£538). This wider analysis is however skewed since the York market (which is largely driven by student households) achieves rental prices of £7 40 on average. Irrespective, average monthly rents in East Riding are lower than both the Yorkshire and Humber average (£534) and the national average (£728).
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Figure 5.4: Rental values pcm in 2011 and 2013
£900 £800 £700 £600 £500 £400 2011 £300 2013 £200 £100 £- East Riding Kingston York Yorkshire England Upon Hull and the Humber
Source: VOA Private Rental Market Statistics 5.18 Between 2011 and 2013 the average monthly rent in East Riding increased by 2.92% from £479 to £493. This is the highest rate of increase across East Riding, Kingston upon Hull and York and higher than the Yorkshire and Humber region which actually suffered a decrease of 1.64%. The rate of increase was however surpassed by national growth of 4.3%.
Affordability
5.19 Figure 4.5 shows that the affordability ratio – the amount by which average house prices exceed average annual earnings – for East Riding (8.56) is higher than the average across East Riding, Kingston upon Hull and York as well as the Yorkshire and Humber region and England generally (7.77, 5.38 and 6.45 respectively). Indeed, East Riding has the highest affordability ratio of all the LPAs suggesting that housing in East Riding is less financially accessible due to average house prices and/or average earnings. This situation implies that there may be a greater imbalance between supply and demand, and particularly low wage levels, at the local level.
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Figure 5 .5: Affordability ratio (2013 )
Source: CLG Table 576: ratio of lower quartile house prices to lower quartile earnings
5.20 The level of affordability across the LPAs has worsened between 2000 and 2013 from an average of 3.23 to 7.77. This clearly shows that housing has become significantly less financially accessible over the last 13 years.
5.21 The affordability ratio in East Riding has increased by 159.29% between 2000 and 2013 which is more than double that at both the regional level (72.99%) and national level (64.96%).
5.22 Overall, the data shows that East Riding is one of the le ss financially accessi ble areas within the Yorkshire and Humber region and nationally. There is a sizeable gap between house prices and average earnings which would suggest that there is some imbalance between the demand for and supply of new homes within East Riding , or low levels of average earni ngs. It should however be noted that a significant number of planning permissions have been granted over the past 18 months which will feed through into completions thereby increasing the supply of new homes with potential to improve delivery of affordable housing within East Riding. As such while increasing housing supply could have a beneficial impact on the affordability ratio, it is also important to consider the need for higher value job creation and economic activity in East Riding to increase average earnings and thereby improve the level of affordability.
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Housing Market Activity
5.23 Yorkshire and the Humber and England as a whole have all experienced a decline in the number of transactions, as a proportion of total dwelling stock between 2001 and 2012. This is likely due to the effects of the economic downturn and, in particular, the effect on mortgage availability in the latter years of that period. Indeed this trend is likely to continue with the introduction of tougher lending criteria by the Financia l Conduct Authority in April 2014 under the Mortgage Market Review (MMR).
5.24 The rate of change in housing market a ctivity for E ast Riding over this period was - 55.69%. This is broadly aligned with (albeit slightly higher than) the rate of change across the Yorkshire and Humber region ( -53.68%).
Figure 5 .6: Housing Market Activity
8.00% 7.00% 6.00% 5.00% 4.00% 2001 3.00% 2012 2.00% 1.00% 0.00% East Kingston York Sub- Yorkshire England Riding Upon Hull region and the Humber
Source: CLG Table 588: Property sales
5.25 The current rate of housing market activity in East Riding is 2.91%. This is higher than the average rate of market activity across East Ri ding, Kingston upon Hull and York and also higher than the national level (2.68 %and 2.75% respectively). It is however marginally lower than the regional rate of 3.28.
5.26 The rate of transactions can, in some circumstances, be considered to be a good indicato r of housing market activity and thus demand levels. However, the transaction rate can be artificially suppressed by other influencing factors such as the scale of new development (which is controlled by the planning system) and a lack of mortgage availabi lity. In any event, the majority of transactions relate to the existing housing stock. Indeed, in 2012 just 7.3% of transactions across the East Riding related
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to new build properties and as such transactions data does little t o gauge the demand for new ho using. As a result, data on transaction rates must be used with an element of caution, recognising that it may not be a wholly accurate reflection of absolute housing demand when used in isolation.
Vacancy Rate
5.27 Figure 5.7 shows the percentage change in nu mber of vacant properties between 2004 and 2012, which has been varied across East Riding, Kingston upon Hull and York. Both Kingston upon Hull and York have seen decreases in vacancy rate while East Riding has experienced an increase in vacancy rate by 27 .09%. . This rate of increase is considerable when compared to both the region and England as a whole where decreases of 2.9% and 5.82% respectively have occurred.
5.28 Irrespective of this t he current vacancy rate in East Riding (3.64) as recoded by Shelter Databank is below that across the region (3.81). This could indicate that there is slightly greater pressure on the housing stock and therefore that there is higher demand. Conversely, vacancy rates in East Riding have been increasi ng as a result of the recession and the unavailability of mortgage finance.
Figure 5.7: Vacan t Properties (2004 and 2012)
Source: Shelter Databank - Vacant dwellings
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Other Considerations
5.29 The extent of overcrowding within an authority can be a further measure useful to gauge the level of demand for new housing. Indeed, overcrowding was assessed as part of the East Riding SHMA and was instrumental in calculating the annual affordable housing requirement.
5.30 Several indicators are used at the LPA level to assess the extent of overcrowding, namely occupancy rating; homelessness and numbers of both temporary and shared households. These indicators are considered in turn below.
Overcrowding
5.31 Current overcrowding levels can be examined using Census data concerning the number of households with an occupancy rating of -1 or -2, i.e. with one or two fewer bedrooms than required, respectively.
5.32 With an overcrowding rate of 2.98% East Riding presently has a lower rate of overcrowding than that of the region and England as a whole (6.37% and 8.39% respectively).
5.33 Between 2001 and 2011 East Riding experienced a 16.65% increase in the rate of overcrowding. This increase may be attributable, at least in part, to the current climate of welfare reforms as well as wider demographic factors (such as ageing populations rather than absolute housing demand.
Homelessness
5.34 Numbers of households classed as homeless can indicate a lack of market and affordable housing. However in this instance East Riding has experienced a 24.32% decrease in homeless households between 2005 and 2013 suggesting that homelessness is not an indicator of high levels of demand in East Riding.
Temporary Homes
5.35 Similarly, numbers of households in temporary accommodation in East Riding have reduced by 53.08% between 2005 and 2013. In any event, in absolute terms, the number of households in temporary accommodation is very small (65) and therefore not a meaningful indicator of demand.
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Shared Dwellings
5.36 Across East Riding, Kingston upon Hull and York, East Riding has the lowest proportion of shared dwellings at 0.03% of total housing stock (just 48 dwellings). Similar to the data for temporary homes, the small number of properties concerned negates this as a meaningful indicator of demand.
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6. Conclusions
6.1 This Addendum Note has been prepared by GVA on behalf of East Riding of Yorkshire Council.
6.2 The Addendum was identified as being required by the Council in response to the release of new data of relevance to the calculation of housing requirements, the continued significance of the need to consider the relationship between the Hull and East Riding housing market area (including the significance of recent strategy and evidence base, and recent investment announcements, across this geography), representations made as part of the Local Plan consultation process, and the latest POPGROUP modelling methodology. It provides a sensitivity test that supplements the original analysis contained within the East Riding LHS.
6.3 As a result of the additional modelling undertaken as part of the Melton Appeal, and as part of this Addendum exercise, a range of figures are presented relating to population projections, household projections, and dwelling requirements. The Addendum sets out a range of household requirement figures, applying a range of models / scenarios, and ultimately considering the impact of both the application of the 2008 and the 2011 headship rates. The exercise concludes that on the basis of evidence currently available the 2011 SNHPs are a robust basis for modelling future housing growth in the East Riding.
6.4 It is important to recognise the impact of the sensitivities presented within the original LHS and this Addendum. In particular it can be noted the updates to the original LHS figure has seen an overall downward pressure. However, there is significant planned levels of employment growth within the ELR and the associated household projections are substantial (and are being delivered – as evidenced through the recent announcement of investment by Siemens and ABP). In addition, the evidence presented suggests that this growth is likely to materialise alongside increasing labour force participation, and could result in a reduction in household size (as more people with jobs will be able to create households where they have previously not been able to).
6.5 It is acknowledged within the ELR that the Local Plan should be based on the provision of higher levels of employment growth and associated land requirements – so that the land supply does not act as a constraint to potential economic growth. Similarly, it is important that the housing requirement within the Local Plan is based on a flexible approach that takes account of the prospects of higher levels of economic growth – consistent with paragraphs 14 and 47 of the NPPF. In addition, the publication of the 2012-based SNPP incorporates an additional year of recessionary activity, running counter to the Local Plan’s ambitions. On that basis it is concluded that the sensitivity
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analysis presented in this Addendum note are considered to potentially underestimate the housing requirement for the East Riding.
6.6 The original LHS identified a housing requirement for the East Riding alone of 1,933 (2011 headship rates) to 2,229 (2008 headship rates) dwellings per annum 2012 – 2029 for the plan period. As part of this Addendum exercise this figure reduced as summarised in the bullet points below:
• Adjustment to reflect a reduced unemployment rate as part of the Melton Appeal: reducing the figures to 1,827 per annum (2011 headship rates), and 2,119 per annum (2008 headship rates);
• Adjustment to reflect the latest PopGroup methodology: changing the figures to 1,888 per annum (2011 headship rates), and 2,165 per annum (2008 headship rates) (NB: these figures do not assume the lower unemployment rates identified during the Melton Appeal); and
• Finally, the adjustment to reflect the latest PopGroup methodology and the latest assumptions as set out in this document: reducing the figures to 1,624 per annum (2011 headship rates), and 1,896 per annum (2008 headship rates).
6.7 Given the concerns outlined above, it is still considered appropriate to plan for higher levels of housing growth across the housing market area, as set out in the Joint Planning Statement. This would also clearly contribute to the delivery of the NPPF, which requires Local Plans to:
• Meet objectively assessed needs, with sufficient flexibility to adapt to rapid change; and
• Boost significantly the supply of housing.
6.8 The decision in the case of Gallagher Homes Ltd / Lioncourt Homes Ltd vs Solihull MBC concluded that the final appropriate step in establishing an appropriate housing requirement is to apply any policy considerations to that figure (i.e. identifying a figure which, on policy grounds, is lower or higher than the full objectively assessed figure for housing need in that area). This is based on co-operating with adjoining or other near-by local planning authorities on the strategic matter of meeting housing requirements across the housing market area.
6.9 This supports the view of considering the East Riding dwelling requirement alongside that of Hull City Council, as outlined in the Hull SHMA, and highlighted through the recently endorsed JPS. The JPS recognises the context of housing requirements and strategy aspirations across the joint housing market area spanning the East Riding and
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Hull, as established through the latest evidence base and strategy documents in place across the sub-region, and consistent with the requirements of NPPF.
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List of Acronyms
ABP Association British Ports
APS Annual Population Survey
ASMigR Age Specific Migration Rates
CLG Communities and Local Government
ELR Employment Land Review
ERY East Riding of Yorkshire
ERYC East Riding of Yorkshire Council
GP General Practitioner
HBF House Builders Federation
HP Household Projections
JPS Joint Planning Statement
JSP Joint Structure Plan
LEP Local Enterprise Partnership
LHS Local Housing Study
LPA Local Planning Authority
MYE Mid Year Estimates
NHS National Health Service
NPPF National Planning Policy Framework
OAN Objective Assessment of Need
ONS Office for National Statistics
PG4 PopGroup Model v4
PPG Planning Practice Guidance
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PRDS Patient Register Data Service
REM Regional Econometric Model
RGF Regional Growth Fund
RSS Regional Spatial Strategy
SEP Strategic Economic Plan
SHMA Strategic Housing Market Assessment
SNHP Sub National Household Projections
SNPP Sub National Population Projections
UPC Unattributable Population Change
YNYER York, North Yorkshire and East Riding
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