Contents 1. INTRODUCING THE CRAIGAVON HOUSING MARKET AREA 3 The Craigavon HMA ............................................................................................................................. 3 2. Craigavon HMA: KEY ECONOMIC AND DEMOGRAPHIC TRENDS 13 Economic Performance .................................................................................................................... 13 Economic Trends ................................................................................................................................. 14 Economic Outlook .............................................................................................................................. 19 Population ............................................................................................................................................ 21 Key issues .............................................................................................................................................. 28 3. CRAIGAVON HMA: THE OWNER OCCUPIED SECTOR 31 Profile of the owner occupied sector ............................................................................................. 31 Key Issues .............................................................................................................................................. 43 4. Craigavon HMA: THE PRIVATE RENTED SECTOR 46 Profile of the Private Rented Sector ................................................................................................ 46 Affordability .......................................................................................................................................... 51 Key issues .............................................................................................................................................. 54 5. Craigavon HMA: The SOCIAL RENTED SECTOR 56 Profile of the social housing stock .................................................................................................... 56 Key issues .............................................................................................................................................. 67 6. BRINGING THE EVIDENCE TOGETHER AND IDENTIFYING IMBALANCES 69 Introduction .......................................................................................................................................... 69 Demographics and the economy .................................................................................................. 69 An ageing population ....................................................................................................................... 71 Improving the residential offer ......................................................................................................... 71 The owner occupied sector ............................................................................................................. 72 The private rented sector .................................................................................................................. 73 The social rented sector .................................................................................................................... 75 Responding to housing stress ............................................................................................................ 75 The rural perspective .......................................................................................................................... 76 Longer term housing system challenges ........................................................................................ 76 Appendix 1: References 79 Appendix 2: Economic Performance 83 Appendix 3: Recent Employment Trends and earnings 86 Appendix 4: Population Projections 88 Appendix 5: CACI PayCheck and family Resources Survey Income Data 91 Appendix 6: Changes in households and occupied stock numbers for 2001 - 2010 93 Appendix 7: Average public sector rent by selected UK region 2001 to 2012 (£) 95 Appendix 8: Social Housing 96 1. INTRODUCING THE CRAIGAVON HOUSING MARKET AREA The Craigavon HMA The Craigavon HMA as identified in a Housing Executive commissioned study is mapped below. The HMA is located in the south east of Northern Ireland and borders County Monaghan. It also neighbours the Belfast, Newry, Dungannon and Mid Ulster HMAs. Map 1: Craigavon Housing Market Area The HMA comprises 46 wards; this includes all the wards in the Armagh local government district (LGD), 22 wards in the Craigavon LGD and the wards of Lawrencetown and Gilford that are part of the Banbridge LGD. For the purpose of the study, three sub areas have been identified, as shown in table 1 below. There are two urban sub areas within the Craigavon HMA, namely Armagh City and Craigavon Urban which includes the towns of Craigavon, Lurgan and Portadown. The formal definition of ‘rural’ is a settlement of less than 4,500 people however, for this study, the remaining wards in the HMA outside of the main urban centres has been defined as Craigavon rural sub area. Table 1: Wards within Craigavon HMA Armagh City Craigavon Rural Craigavon Urban Abbey Park Keady Drumgask Callan Bridge Tandragee Tavanagh Demesne Rich Hill Taghnevan Downs Poyntz Pass Parklake Observatory Milford Mourneview The Mall Market Hill Knocknashane Loughgall Killycomain Laurelvale Kernan Lawrencetown Edenderry Killeen Drumgor Hockley Woodville Hamiltionsbawn Court Derrynoose Corcrain Charlemont Church Carrigatuke Brownstown Ballymartrim Ballyoran Killylea Ballybay The Birches Annagh Bleary Drumnamoe Derrytrasna Gilford Policy Context This Chapter sets out the main policies and strategies under which the Craigavon housing market functions, this includes welfare reform, planning reform and local government reforms. UK Economy Since 2008, the UK economy has remained weak and has experienced a double dip recession. The UK officially entered recession in January 2009 after 2 quarters of negative growth. The economy emerged from this recession in July - September 2009 and entered a period of fragile growth. However, after negative economic growth over two quarters, from October 2011 to March 2012 the UK entered a ‘double dip’ recession in 2012. In Quarter 3 of this year, boosted by short factors such as the Olympic Games, the UK economy experienced growth of 1% but there is increasing evidence that the UK economy could be moving towards a triple dip recession. The Chancellor in his Autumn Statement 2012 stated that the Office of Budget Responsibility is predicting a drop in growth by 0.1% for 2012, which is a significant decrease on the 0.8% growth for this year predicted at the Budget in March 2012. The Office of Budget Responsibility has now forecast lower growth rates over the next few years, with a prediction of 1.2% growth for 2013, instead of the previous prediction of 2%. The Chancellor has therefore announced an extension of economic austerity from 2016 to 2018, as the target for reducing national debt has not been met. In the Autumn Statement, the Chancellor announced further cuts in the Welfare Bill, with working age benefits and child benefit capped at a 1% increase for the next 3 years; this is below the 2.7% rate of inflation under the Consumer Price Index. Local housing allowances will also be capped at a 1% rise for 2 years from 2014. Welfare Reform The Welfare Reform Act received Royal Assent in March 2012; this Act applies to Great Britain. A Welfare Reform Bill for Northern Ireland was presented to the Assembly in October 2012; this Bill contains the measures in the Great Britain Welfare Reform Act. A key element of Welfare Reform is replace benefits and tax credits, including housing benefit with a ‘Universal Credit’ for all claimants by October 2017. Recipients of Universal Credit will receive one monthly payment, from which rent should be paid. Changes to Housing Benefit include a link between housing benefit payments to the size of accommodation required by a household. Tenants in the social rented sector of working age, who are under occupying their property, could find their Housing Benefit reduced by up to 25% from April 2013. This may lead to a number of tenants wishing to move to smaller properties, which may be in short supply in certain locations. Changes to Local Housing Allowances will affect Housing Benefit recipients in the Private Rented Sector. These changes include the intention to calculate Housing Benefit entitlement with reference to local rents at the 30th percentile, instead of the 50th percentile, and the maximum rate is to be set for a four-bedroom property. In addition, the amount of local housing allowance will be reduced to cover the cost of a room in shared accommodation for single people under the age of 35. Financial Services Authority - Mortgage Market Review In October 2012, the Financial Services Authority (FSA) published reforms for the mortgage market as part of its Mortgage Market Review (MMR). The regulatory framework for mortgage lending in 2007 proved ineffective at constraining high risk lending and borrowing. The purpose of the changes in regulation contained in the MMR is to ensure that the mortgage market is sustainable. Reforms include: • Affordability assessment – lenders must verify income and ensure the mortgage is affordable on net income, taking into account committed expenditure and basic household expenditure • Interest rate stress test – the lender should also take into account of the impact on mortgage payments should interest rates