Coventry & Warwickshire Joint Strategic Housing Market Assessment Final Report November 2013 Prepared by GL Hearn Limited 20 Soho Square London W1D 3QW T +44 (0)20 7851 4900 F +44 (0)20 7851 4910 glhearn.com Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 GL Hearn Page 2 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 Contents Section Page 1 INTRODUCTION 13 2 POLICY BACKGROUND 15 3 DEFINING THE HOUSING MARKET AREA 25 4 HOUSING STOCK AND SUPPLY TRENDS 35 5 HOUSING MARKET DYNAMICS 53 6 DEMOGRAPHIC AND ECONOMIC DRIVERS OF THE HOUSING MARKET 75 7 CONSIDERING FUTURE HOUSING NEEDS 91 8 AFFORDABLE HOUSING NEED 115 9 NEED FOR DIFFERENT SIZES AND TYPES OF HOMES 141 10 HOUSING NEEDS OF SPECIFIC GROUPS IN THE POPULATION 161 11 CONCLUSIONS 191 LIST OF FIGURES FIGURE 1: HOUSING MARKET AREAS DEFINED IN THE WEST MIDLANDS REGIONAL HOUSING STRATEGY 26 FIGURE 2: CLG STRATEGIC HOUSING MARKET AREAS 28 FIGURE 3: CHANGE IN TENURE PROFILE (2001 – 2011) 38 FIGURE 4: % DWELLING STOCK BY TYPE AT HMA LEVEL, 2011 39 FIGURE 5: SIZE OF HOMES AT HMA LEVEL, 2011 41 FIGURE 6: DWELLINGS BY COUNCIL TAX BAND AT HMA LEVEL, 2011 42 FIGURE 7: NET CHANGES IN HOUSING STOCK, 2001-12 47 FIGURE 8: NET COMPLETIONS 48 FIGURE 9: UNDERSTANDING HOUSING DEMAND 53 FIGURE 10: UK ECONOMIC GROWTH QUARTER ON QUARTER A YEAR AGO, 2007-2013 55 GL Hearn Page 3 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 FIGURE 11: TRENDS IN GROSS MORTGAGE LENDING, UK 56 FIGURE 12: INTEREST RATES 57 FIGURE 13: MORTGAGE PAYMENTS AS A % OF MONTHLY INCOME 58 FIGURE 14: MEDIAN HOUSE PRICE TRENDS, 1998 – 2007 59 FIGURE 15: MEDIAN HOUSE PRICE TRENDS 2008 – 2012 (Q3) 60 FIGURE 16: AVERAGE HOUSE PRICES BY TYPE (OCTOBER 2012 – MARCH 2013) 61 FIGURE 17: QUARTERLY SALES INDEX, 1998 – 2011 HMA LEVEL 62 FIGURE 18: QUARTERLY SALES INDEX, 1998 – 2011 LOCAL AUTHORITY LEVEL 63 FIGURE 19: TREND IN BULK RESIDENTIAL LAND VALUES, 1983-2010 64 FIGURE 20: SAVILLS RESIDENTIAL LAND PERFORMANCE (2002-2012) 65 FIGURE 21: TREND IN POPULATION ACROSS THE HMA, 1981-2011 75 FIGURE 22: COMPONENTS OF POPULATION CHANGE, 2001-11 76 FIGURE 23: POPULATION GROWTH BY AUTHORITY, 2001-11 77 FIGURE 24: COMPONENTS OF POPULATION CHANGE AT AUTHORITY LEVEL, 2001-11 78 FIGURE 25: POPULATION AGE STRUCTURE BY AUTHORITY, MID 2011 79 FIGURE 26: ETHNIC COMPOSITION, 2011 79 FIGURE 27: CHANGE IN ETHNIC COMPOSITION OF THE POPULATION, 2001-11 80 FIGURE 28: EXPERIAN BASELINE ECONOMETRIC PROJECTIONS FOR EMPLOYMENT, 2011-31 86 FIGURE 29: CHANGES IN JOBS DENSITIES, 2001-11 88 FIGURE 30: ENTRY-LEVEL PURCHASE PRICE 116 FIGURE 31: VOLUME OF PROPERTIES ADVERTISED FOR SALE 117 FIGURE 32: ENTRY-LEVEL PRIVATE RENTS 118 FIGURE 33: VOLUME OF PROPERTIES ADVERTISED TO RENT 119 FIGURE 34: DISTRIBUTION OF HOUSEHOLD INCOME ACROSS THE HMA 124 FIGURE 35: OVERVIEW OF BASIC NEEDS ASSESSMENT MODEL 126 FIGURE 36: SUMMARY OF HOUSING MARKET MODEL 142 GL Hearn Page 4 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 FIGURE 37: AVERAGE BEDROOMS BY AGE, SEX AND TENURE – COVENTRY/WARWICKSHIRE 143 FIGURE 38: IMPACT OF DEMOGRAPHIC TRENDS ON AFFORDABLE HOUSING NEED BY HOUSE SIZE, 2011 TO 2031 – COVENTRY/WARWICKSHIRE 146 FIGURE 39: IMPACT OF DEMOGRAPHIC TRENDS ON MARKET HOUSING NEED BY HOUSE SIZE, 2011 TO 2031 – COVENTRY/WARWICKSHIRE 148 FIGURE 40: OVERLAP BETWEEN AFFORDABLE HOUSING TENURES 156 FIGURE 41: TENURE OF OLDER PERSON HOUSEHOLDS – COVENTRY/WARWICKSHIRE 165 FIGURE 42: TENURE OF OLDER PERSON HOUSEHOLDS – BY LOCAL AUTHORITY 165 FIGURE 43: OCCUPANCY RATING OF OLDER PERSON HOUSEHOLDS – COVENTRY/WARWICKSHIRE 166 FIGURE 44: OCCUPANCY RATING OF OLDER PERSON HOUSEHOLDS – BY LOCAL AUTHORITY 167 FIGURE 45: POPULATION WITH LTHPD IN EACH AGE BAND 173 FIGURE 46: CHANGES IN THE BME POPULATION 2001 TO 2011 – COVENTRY/WARWICKSHIRE 175 FIGURE 47: NINO REGISTRATIONS, 2002-12 175 FIGURE 48: POPULATION AGE PROFILE BY ETHNIC GROUP (2011) 176 FIGURE 49: TENURE BY ETHNIC GROUP – COVENTRY/WARWICKSHIRE 177 FIGURE 50: OCCUPANCY RATING BY ETHNIC GROUP – COVENTRY/WARWICKSHIRE 177 FIGURE 51: TENURE OF HOUSEHOLDS WITH DEPENDENT CHILDREN – COVENTRY/WARWICKSHIRE 179 FIGURE 52: OCCUPANCY RATING AND HOUSEHOLDS WITH DEPENDENT CHILDREN 180 FIGURE 53: TENURE BY AGE OF HRP – COVENTRY/WARWICKSHIRE 182 FIGURE 54: ECONOMIC ACTIVITY BY AGE OF HRP – COVENTRY/WARWICKSHIRE 183 FIGURE 55: OVERVIEW OF METHODOLOGY 201 FIGURE 56: ONS MIGRATION ASSUMPTION 2011/12 TO 2030/31 203 FIGURE 57: NET COMPLETIONS 2001/2 TO 2010/11 208 FIGURE 58: POPULATION OF COVENTRY/WARWICKSHIRE HMA – 2011 209 FIGURE 59: POPULATION AGE PROFILE (2011) 210 GL Hearn Page 5 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 FIGURE 60: ESTIMATED ANNUAL LEVEL OF NET MIGRATION BY FIVE-YEAR AGE BAND (2011-2031) 212 FIGURE 61: OVERVIEW OF ECONOMIC-DRIVEN PROJECTION METHODOLOGY 212 FIGURE 62: PROPORTION OF POPULATION WORKING 213 FIGURE 63: UNEMPLOYMENT RATE 214 FIGURE 64: PROJECTED CHANGES IN EMPLOYMENT RATES 215 FIGURE 65: PAST AND PROJECTED TRENDS IN AVERAGE HOUSEHOLD SIZE 217 LIST OF TABLES TABLE 1: SUMMARY OF PROPOSED HOUSING IN COVENTRY / WARWICKSHIRE 23 TABLE 2: HOUSING MARKET AREAS IN THE WEST MIDLANDS 27 TABLE 3: GROSS MIGRATION FLOWS PER 10,000 POPULATION, 2008-11 30 TABLE 4: GROSS COMMUTING FLOWS, 2011 32 TABLE 5: COMPARISON OF HOUSE PRICES AND HOUSE PRICE GROWTH 2010-13 33 TABLE 6: TENURE, 2011 36 TABLE 7: DETAILED TENURE PROFILE, 2011 (%) 37 TABLE 8: DWELLING STOCK ACROSS THE LOCAL AUTHORITIES (%) 40 TABLE 9: SIZE OF HOMES BY LOCAL AUTHORITY (%) 41 TABLE 10: PERCENTAGE OF DWELLING STOCK BY COUNCIL TAX BAND AT LOCAL AUTHORITY LEVEL, 2011 43 TABLE 11: OVERCROWDING, 2011 44 TABLE 12: CHANGE IN OVERCROWDING, 2001-11 45 TABLE 13: VACANT AND SECOND HOMES, 2011 46 TABLE 14: NET COMPLETIONS 47 TABLE 15: POLICIES FOR HOUSING PROVISION IN ADOPTED RSS, 2008 49 TABLE 16: HOUSING DELIVERY PERFORMANCE AGAINST ADOPTED RSS 49 TABLE 17: HOUSING DELIVERY PERFORMANCE AGAINST RSS PHASE 2 PANEL FIGURES 50 GL Hearn Page 6 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 TABLE 18: RESIDENTIAL LAND VALUES, JULY 2010 64 TABLE 19: KF RESIDENTIAL DEVELOPMENT LAND INDEX – ENGLAND & WALES 65 TABLE 20: REGIONAL LAND VALUES VS. FORMER PEAK 66 TABLE 21: ANNUAL GROWTH IN LOWER QUARTILE HOUSE PRICES 66 TABLE 22: CHANGES IN LOWER QUARTILE PRICE TO INCOME RATIOS – COVENTRY AND COMPARATORS 67 TABLE 23: CHANGES IN LOWER QUARTILE PRICE TO INCOME RATIOS – WARWICKSHIRE AND COMPARATORS 67 TABLE 24: POPULATION BY AUTHORITY, MID 2011 75 TABLE 25: POPULATION GROWTH BY AUTHORITY, 1991-2011 76 TABLE 26: TOTAL EMPLOYMENT, 2011 81 TABLE 27: LOCATION QUOTIENT ANALYSIS OF SECTORAL STRUCTURE OF EMPLOYMENT, 2011 82 TABLE 28: EMPLOYMENT GROWTH RATES (% PER ANNUM), DISTRICTS 1997-2011 83 TABLE 29: GROWTH RATES FOR GVA (% PER ANNUM), DISTRICTS 1997-2011 84 TABLE 30: FORECAST ANNUAL GROWTH RATES IN ECONOMIC OUTPUT, 2011-31 85 TABLE 31: PROJECTED EMPLOYMENT GROWTH 2011-31 87 TABLE 32: 2011-BASED HOUSEHOLD PROJECTIONS (2011-21) 92 TABLE 33: EXTENDING AND UPDATING THE NATIONAL PROJECTIONS 93 TABLE 34: SENSITIVITY ANALYSIS – MIGRATION 94 TABLE 35: SENSITIVITY ANALYSIS – HOUSEHOLD FORMATION 95 TABLE 36: POTENTIAL TO SUPPORT GROWTH IN LABOUR SUPPLY 97 TABLE 37: SUITE OF PROJECTIONS RUN 98 TABLE 38: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – HMA 100 TABLE 39: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL - COVENTRY 102 TABLE 40: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – COVENTRY 102 TABLE 41: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – NORTH WARWICKSHIRE 104 TABLE 42: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – NORTH WARWICKSHIRE 105 GL Hearn Page 7 of 217 J: \Planning\Job Files\J029539 - Coventry & Warwickshire Joint SHMA\Reports\Final SHMA Report (18-11-13-nxi).doc Coventry & Warwickshire Joint Strategic Housing Market AssessmentFinal Report, November 2013 TABLE 43: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – NUNEATON & BEDWORTH 106 TABLE 44: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – NUNEATON & BEDWORTH 106 TABLE 45: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – RUGBY 108 TABLE 46: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – RUGBY 108 TABLE 47: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – STRATFORD-ON-AVON 110 TABLE 48: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – STRATFORD-ON-AVON 110 TABLE 49: SUMMARY OF PROJECTIONS 2011 TO 2031 – ANNUAL – WARWICK 112 TABLE 50: SUMMARY OF PROJECTIONS 2011 TO 2031 – TOTAL – WARWICK 112 TABLE 51: INITIAL CONCLUSIONS ON HOUSING NEED PER ANNUM BASED ON DEMOGRAPHIC AND ECONOMIC EVIDENCE, 2011-31 113 TABLE 52: MAXIMUM MONTHLY LHA PAYMENTS BY SIZE AND BROAD HOUSING MARKET AREA 120 TABLE 53: MONTHLY AVERAGE SOCIAL RENT LEVELS 121 TABLE 54: COST OF AFFORDABLE RENTED HOUSING BY SIZE AND SUB-AREA (PER MONTH) 122 TABLE 55: INDICATIVE INCOME REQUIRED TO PURCHASE/RENT WITHOUT ADDITIONAL SUBSIDY 122 TABLE 56: