Housing Supply
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APPENDIX 3: HOUSING SUPPLY While an analysis of housing supply is not an essential requirement in the SHMA guidance checklist, it is an extremely important factor in understanding how the market works. Influencing supply is one of relatively few ‘levers’ which Planning policy has to influence housing markets, but is still quite limited in its impact, affecting only about 1% of stock a year, or often much less. Developers too may have much to gain through an improved strategic understanding of how supply varies, and is perceived, received and absorbed. 3) Housing supply .........................................................................................1 3.1 Introduction........................................................................................1 Appendix 3:1 Length of residence by tenure.........................................2 3.2 Housing for sale.................................................................................3 Appendix 3:2 Overall average HMA house prices and sales volumes 2001-2007.............................................................................................3 Appendix 3:3 Sales by local authority ...................................................4 Appendix 3:4 Sales as proportion of privately owned stock by LA ........4 Appendix 3:5 New sales by local authority............................................5 Appendix 3:6 Leicester City only – new and resales .............................6 Appendix 3:7 Leicester City only – sales by property type ....................6 3.3 New development..............................................................................7 Appendix 3:8 East Midlands housing starts and completions 2005 -7 ..7 3.4 Private renting ...................................................................................8 Appendix 3:9 Extract from NHPAU Rapid Evidence Assessment.........9 Appendix 3:10 Impacts of the Private Rented Sector............................9 3.5 Private rented housing stock ...........................................................10 Appendix 3:11 Percentage of Private Rented stock by Output Area 2001 ....................................................................................................10 Appendix 3:12 Central Leicester - % of PRS stock by Output Area 2001 ............................................................................................................11 Appendix 3:13 BRE stock model – levels of non decent homes by Output Area.........................................................................................12 Appendix 3:14 Estimated private rented sector stock and % by settlement............................................................................................13 Appendix 3:15 Number & proportion of PRS by housing submarket 2001 ....................................................................................................14 Appendix 3:16 Submarkets in Leicester with highest proportion of private renting .....................................................................................16 3.6 Turnover ..........................................................................................17 3.7 Effect on supply and demand ..........................................................17 Appendix 3:17 Empty property- submarkets with most PRS in Leicester 2007 ....................................................................................................18 3.8 Effect on prices................................................................................20 3.9 Public attitudes ................................................................................21 Appendix 3:18 Extract from Priced Out ...............................................21 3.10 Social housing supply......................................................................22 3.11 Local authority stock and lettings.....................................................23 Appendix 3:19 Patterns of local authority housing stock .....................23 Appendix 3:20 Leicester area average submarket house prices 2007 and LA stock .......................................................................................24 Appendix 3:21 Leicester City Council estate areas and house price patterns ...............................................................................................25 Appendix 3:22 Leicester City Council sales by estate to 01/04/2007 ..26 Appendix 3:23 LA and RSL lets and turnover as % of stock by submarket ...........................................................................................28 Appendix 3:24 Highest social stock levels by submarket and turnover. ............................................................................................................31 Appendix 3:25 Local Authority lettings (whole HMA)...........................32 Appendix 3:26 Number of bedrooms of local authority lets .................32 Appendix 3:27 Local authority stock size profile..................................33 Appendix 3:28 LA lets by housing submarket 2006/7 .........................33 3.12 Housing associations (Registered Social Landlords – RSLs) lets ...37 Appendix 3:29 RSL stock....................................................................37 Appendix 3:30 Housing association lets..............................................37 Appendix 3:31 RSL stock and lets by settlement ................................38 Appendix 3:32 Higher turnover rates by submarkets with 100+ RSL stock....................................................................................................39 Appendix 3:33 Reasons for letting of RSL properties 2006-7..............39 Appendix 3:34 Reasons for RSL vacancies ........................................40 Appendix 3:35 RSL new and relets .....................................................41 Appendix 3:36 RSL voids at 31/3/07 ...................................................41 3.13 Intermediate Housing sales .............................................................41 Appendix 3:37 Intermediate sales 2006-7...........................................42 Appendix 3:38 Intermediate sales 2004-5...........................................43 Appendix 3:39 Intermediate sales 2005-6...........................................43 Appendix 3:40 Previous tenure of purchasers from RSLs...................44 Appendix 3:41 Previous tenure of purchasers from RSLs- % .............44 Appendix 3:42 Incomes of purchasers of IH 2004-7 ...........................45 3.14 Implications for policy ......................................................................45 3.15 Intermediate Housing in the market.................................................46 3.16 Alternative approaches and products .............................................47 3) Housing supply 3.1 Introduction 3.1.a Clearly the supply of housing is a crucial aspect of the operation of housing markets, and indeed the Barker Report of 2004 argues that lack of supply is a major cause of price rises over recent years. But like other aspects of housing, supply is complicated, variable and widely differentiated - by type, size, location, tenure, price, design, etc - and this is often under analysed and inadequately discussed in housing market and needs studies. Economists summarise the unique position of housing as ‘fixed, durable and heterogeneous’. 3.1.b Supply of the wrong kind in the wrong place at the wrong time can not only fail to meet demand or need and result in enormous wastes of resources, but also creates problems which have implications far beyond just housing, which can last for many years and take further extensive resources to address. 3.1.c Unlike most other ‘products’, housing supply is also very strongly linked to demand in that most transactions are of existing property – resales or relets (the term ‘second hand’ is not usually applied to housing). Normally less than 1% of the annual flow of supply is newly built in the UK. 3.1.d Different aspects of supply, mainly analysed by tenure, are set out below, but the links and flows between tenures need to be born in mind. These are shown in the Survey of English Housing (see table below). 1 Appendix 3:1 Length of residence by tenure 3.1.e This is related to ‘lifestage’, and interpreting the data from the SEH median figures indicates typical housing trajectories, such as:- • Young households in private renting for short periods – median 1.7 years • Buyers with mortgages trading up less frequently – median 7.1 years; • Older owners staying in their home for long periods and clearing their mortgage – median 22.4 years; • Social tenants with a more mixed length of residence; – median 8.6 years for Councils with more older tenants, and 6.9 years for housing association tenants with more younger tenants and newer stock. 3.1.f These flows in the owned sector are directly affected by the ease or difficulty of transactions, which is reflected in the volumes. There is generally an optimum range for turnover, because too much ‘churn’ is often an indication of an unpopular area or property type, as households seek to leave it and move on. 2 3.2 Housing for sale 3.2.a House prices and volume of sales provide the closest match to the evidence and indicators of normal market economics, but are again complicated by the unique position of housing. NHPAU modelling confirms that in addition to household growth and limited supply, rising incomes and low, relatively stable interest rates, are important factors. 3.2.b Land Registry data since 2001 shows a link between the rate