Isle of Wight - Strategic Housing Market Assessment Final Report Isle of Wight Council June 2014 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 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 Contents Section Page EXECUTIVE SUMMARY 9 1 INTRODUCTION 13 2 DEFINING THE HOUSING MARKET AREA 15 3 POLICY CONTEXT 35 4 STOCK AND SUPPLY TRENDS 45 5 HOUSING MARKET DYNAMICS AND MARKET SIGNALS 53 6 ASSESSING FUTURE HOUSING REQUIREMENTS 75 7 AFFORDABLE HOUSING NEEDS 89 8 REQUIREMENTS FOR DIFFERENT SIZES AND TYPES OF HOMES 117 9 HOUSING NEEDS OF SPECIFIC GROUPS IN THE POPULATION 129 10 CONCLUSIONS AND RECOMMENDATIONS 153 List of Figures FIGURE 1: TRENDS IN HOUSE PRICES, 2009-13 18 FIGURE 2: HOUSING SUB-MARKETS DEFINED IN THE 2007 SHMA 20 FIGURE 3: MSOA AVERAGE TRAVEL TO WORK DISTANCES – NEWPORT 21 FIGURE 4: MSOA AVERAGE TRAVEL TO WORK DISTANCES – RYDE 22 FIGURE 5: MSOA AVERAGE TRAVEL TO WORK DISTANCES – THE BAY 22 FIGURE 6: AVERAGE PRICE DIFFERENTIAL COMPARISON – 4-DIGIT POSTCODES, APRIL 2013 23 FIGURE 7: PRIMARY SCHOOLS LOCATED BY PARISH 2013 24 FIGURE 8: SECONDARY AND COLLEGE PROVISION LOCATED BY PARISH 2013 25 FIGURE 9: % EMPLOYED IN LOWER-SKILLED JOBS 26 FIGURE 10: % EMPLOYED IN HIGHER-SKILLED JOBS 27 FIGURE 11: PERCENTAGE OF ECONOMICALLY-ACTIVE RESIDENTS BY PARISH 28 GL Hearn Page 2 of 158 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 FIGURE 12: RETIRED RESIDENTS AS A PROPORTION OF ALL HOUSEHOLDS BY PARISH 29 FIGURE 13: UNEMPLOYED RESIDENTS AS A PROPORTION OF RESIDENTS PER PARISH 30 FIGURE 14: COUNCIL TAX BANDS A-E IN 2007 31 FIGURE 15: COUNCIL TAX BANDS F-H IN 2007 31 FIGURE 16: 2013 HOUSING SUB-MARKETS 33 FIGURE 17: CHANGE IN TENURE PROFILE CORE IOW, 2001 – 2011 47 FIGURE 18: LOCATION OF EMPTY PROPERTIES ON THE ISLAND, SEPT 2013 51 FIGURE 19: UNDERSTANDING FUTURE HOUSING DEMAND 53 FIGURE 20: UK ECONOMIC GROWTH, 2007-2013 55 FIGURE 21: TRENDS IN GROSS MORTGAGE LENDING 56 FIGURE 22: TRENDS IN MORTGAGE APPROVALS BY TYPE, UK 2011-2013 57 FIGURE 23: BASE INTEREST RATES 58 FIGURE 24: MEDIAN HOUSE PRICE TRENDS, 1998 – 2007 59 FIGURE 25: MEDIAN HOUSE PRICE TRENDS, 2007-2012 (Q3) 60 FIGURE 26: SEASONALLY ADJUSTED AVERAGE HOUSE PRICES, ISLE OF WIGHT 61 FIGURE 27: MEDIAN HOUSE PRICES BY TYPE – LOCAL AUTHORITIES (DEC 2012- NOV 2013) 62 FIGURE 28: INDEXED SALES TRENDS – 1998-2011 63 FIGURE 29: INDEXED SALES TRENDS, 2006-13 64 FIGURE 30: PERCENTAGE OF SALES BY TYPE DEC 2012-NOV 2013 65 FIGURE 31: MEDIAN MONTHLY RENTAL LEVELS – 2011 - 2013 65 FIGURE 32: LOWER QUARTILE AFFORDABILITY (PRICE/INCOME) – (1997 - 2012) 67 FIGURE 33: GROWTH IN DWELLING STOCK, 2001-12 72 FIGURE 34: NET COMPLETIONS 2001-2013 72 FIGURE 35: ENTRY-LEVEL PURCHASE PRICE AND PRIVATE RENT 92 FIGURE 36: VOLUME OF PROPERTIES ADVERTISED FOR SALE AND RENT 93 FIGURE 37: DISTRIBUTION OF HOUSEHOLD INCOME – ISLE OF WIGHT 96 GL Hearn Page 3 of 158 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 FIGURE 38: OVERVIEW OF BASIC NEEDS ASSESSMENT MODEL 98 FIGURE 39: OVERLAP BETWEEN AFFORDABLE HOUSING TENURES 112 FIGURE 40: APPROACH TO HOUSING MARKET MODELLING 118 FIGURE 41: AVERAGE BEDROOMS BY AGE, SEX AND TENURE – ISLE OF WIGHT 119 FIGURE 42: IMPACT OF DEMOGRAPHIC TRENDS ON AFFORDABLE HOUSING NEED BY HOUSE SIZE, 2011 TO 2036 – ISLE OF WIGHT 122 FIGURE 43: IMPACT OF DEMOGRAPHIC TRENDS ON MARKET HOUSING NEED BY HOUSE SIZE, 2011 TO 2036 – ISLE OF WIGHT 123 FIGURE 44: TENURE OF OLDER PERSON HOUSEHOLDS – ISLE OF WIGHT 132 FIGURE 45: OCCUPANCY RATING OF OLDER PERSON HOUSEHOLDS – ISLE OF WIGHT 133 FIGURE 46: POPULATION WITH LTHPD IN EACH AGE BAND 137 FIGURE 47: CHANGES IN THE BME POPULATION 2001 TO 2011 – ISLE OF WIGHT 140 FIGURE 48: POPULATION AGE PROFILE BY ETHNIC GROUP (2011) 141 FIGURE 49: TENURE BY ETHNIC GROUP – ISLE OF WIGHT 142 FIGURE 50: OCCUPANCY RATING BY ETHNIC GROUP – ISLE OF WIGHT 143 FIGURE 51: TENURE OF HOUSEHOLDS WITH DEPENDENT CHILDREN – ISLE OF WIGHT 144 FIGURE 52: OCCUPANCY RATING AND HOUSEHOLDS WITH DEPENDENT CHILDREN 145 FIGURE 53: TENURE BY AGE OF HRP – ISLE OF WIGHT 146 FIGURE 54: ECONOMIC ACTIVITY BY AGE (PEOPLE) – ISLE OF WIGHT 147 List of Tables TABLE 1: MAIN NET MIGRATION FLOWS TO/ FROM ISLE OF WIGHT, 2010-11 17 TABLE 2: PARISHES AND ‘BEST FIT’ WARDS WITHIN EACH SUB-MARKET 34 TABLE 3: HOUSEHOLDS (2011) 45 TABLE 4: TENURE PROFILE - DWELLINGS, 2012 45 TABLE 5: TENURE, CENSUS 2011 46 TABLE 6: GROWTH IN HOUSEHOLDS (2001-2011) 46 GL Hearn Page 4 of 158 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 TABLE 7: ACCOMMODATION TYPE - HOUSEHOLDS (QS402EW), 2011 47 TABLE 8: NUMBER OF BEDROOMS (QS411EW) CENSUS 2011 48 TABLE 9: KEY FIGURES FOR HOUSING, CENSUS 2011 49 TABLE 10: OVERCROWDING, 2011 – BEDROOM STANDARD 49 TABLE 11: CHANGES IN OVERCROWDING USING OCCUPANCY RATING, 2001-11 50 TABLE 12: COMPARISON OF HOUSE PRICE CHANGES 61 TABLE 13: MONTHLY MEDIAN RENTAL COSTS BY SIZE (DEC 2013) 66 TABLE 14: COMPARISON OF MEDIAN AND LOWER QUARTILE AFFORDABILITY, 2011-2012 67 TABLE 15: OVERCROWDING, 2011 70 TABLE 16: CHANGES IN OVERCROWDING (2001-2011) – BASED ON ROOM STANDARD 71 TABLE 17: VACANT AND SECOND HOMES, 2011 71 TABLE 18: HOUSING COMPLETIONS 73 TABLE 19: PROJECTED ISLAND HOUSEHOLD GROWTH 2008-33 – CLG 2008- BASED HOUSEHOLD PROJECTIONS 76 TABLE 20: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-21 – CLG 2011- BASED HOUSEHOLD PROJECTIONS 77 TABLE 21: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-36 – PROJ 1 ADJUSTED SNPP-BASED HOUSEHOLD PROJECTIONS 79 TABLE 22: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-36 – PROJ 2 ADJUSTED SNPP-BASED HOUSEHOLD PROJECTIONS WITH 2008 HEADSHIP ASSUMPTIONS 80 TABLE 23: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-36 – PROJ 3 ADJUSTED SNPP-BASED HOUSEHOLD PROJECTIONS WITH MIDPOINT HEADSHIP ASSUMPTIONS 81 TABLE 24: PAST TRENDS IN NET MIGRATION 82 TABLE 25: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-36 – PROJ 4 (10 YR MIGRATION TREND) AND PROJ 5 (5 YR MIGRATION TREND) 83 TABLE 26: EMPLOYMENT GROWTH ASSUMPTIONS USED IN MODELLING 86 TABLE 27: FORECAST EMPLOYMENT GROWTH BY SECTOR, 2011-30 86 TABLE 28: PROJECTED ISLAND HOUSEHOLD GROWTH 2011-36 – PROJ A (JOBS BASELINE) AND PROJ B (RESIDENTS IN EMPLOYMENT) 87 GL Hearn Page 5 of 158 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 TABLE 29: MAXIMUM LHA PAYMENTS BY SIZE 94 TABLE 30: MONTHLY AVERAGE SOCIAL RENT LEVELS – ISLE OF WIGHT 94 TABLE 31: INDICATIVE INCOME REQUIRED TO PURCHASE/RENT WITHOUT ADDITIONAL SUBSIDY 95 TABLE 32: INCOME LEVELS BY SUB-AREA 97 TABLE 33: ESTIMATED PROPORTION OF HOUSEHOLD UNABLE TO AFFORD MARKET HOUSING WITHOUT SUBSIDY 98 TABLE 34: ESTIMATED NUMBER OF HOUSEHOLDS IN UNSUITABLE HOUSING 100 TABLE 35: ESTIMATED BACKLOG NEED BY SUB-AREA 100 TABLE 36: ESTIMATED LEVEL OF HOUSING NEED FROM NEWLY FORMING HOUSEHOLDS (PER ANNUM) 102 TABLE 37: ESTIMATED LEVEL OF HOUSING NEED FROM EXISTING HOUSEHOLDS (PER ANNUM) 103 TABLE 38: ESTIMATED FUTURE HOUSING NEED (PER ANNUM) 103 TABLE 39: ANALYSIS OF PAST SOCIAL/AFFORDABLE RENTED HOUSING SUPPLY (PER ANNUM - PAST 3 YEARS) 104 TABLE 40: SUPPLY OF AFFORDABLE HOUSING BY SUB-MARKET 105 TABLE 41: ESTIMATED LEVEL OF HOUSING NEED (2011-36) 105 TABLE 42: ESTIMATED LEVEL OF HOUSING NEED (PER ANNUM) 106 TABLE 43: ANNUAL NEED FOR AFFORDABLE HOUSING (INCLUDING DEVELOPMENT PIPELINE) 107 TABLE 44: PROPORTION OF HOUSEHOLDS WHO CANNOT AFFORD MARKET HOUSING BY INCOME CATEGORY 113 TABLE 45: NET AFFORDABLE NEED WITHIN DIFFERENT AFFORDABILITY CATEGORIES 114 TABLE 46: NET NEED IN DIFFERENT AFFORDABILITY CATEGORIES (PERCENTAGES) 115 TABLE 47: ESTIMATED PROFILE OF DWELLINGS IN 2011 BY SIZE 120 TABLE 48: MODELLED SIZE OF DWELLINGS NEEDED FOR THE HMA 2011 TO 2036 – AFFORDABLE HOUSING 121 TABLE 49: MODELLED SIZES OF DWELLINGS NEEDED 2011 TO 2036 – MARKET HOUSING 123 TABLE 50: DEMOGRAPHICALLY-DRIVEN NEED FOR DIFFERENT SIZES OF HOMES, 2011 TO 2036 124 GL Hearn Page 6 of 158 Isle of Wight - Strategic Housing Market Assessment, Final Report, June 2014 TABLE 51: SETTLEMENT LEVEL ESTIMATES OF DWELLING SIZES (2011-36): FUTURE MARKET HOUSING 126 TABLE 52: SETTLEMENT LEVEL ESTIMATES OF DWELLING SIZES (2011-36): FUTURE AFFORDABLE HOUSING 126 TABLE 53: INDICATIVE NEED FOR DIFFERENT SIZES OF HOMES (2011-36) 127 TABLE 54: OLDER PERSON POPULATION (2011) 131 TABLE 55: PROJECTED CHANGE IN POPULATION OF OLDER PERSONS (2011 TO 2036) 131 TABLE 56: PENSIONER HOUSEHOLDS (CENSUS 2011) 132 TABLE 57: PENSIONER HOUSEHOLDS WITH OCCUPANCY RATING OF +2 OR MORE BY TENURE 134 TABLE 58: ESTIMATED POPULATION CHANGE FOR RANGE OF HEALTH ISSUES (2011 TO 2036) 134 TABLE 59: ESTIMATED REQUIREMENT FOR SPECIALIST (EXTRA-CARE) HOUSING (2011-36) 136 TABLE 60: HOUSEHOLDS AND PEOPLE WITH LONG-TERM HEALTH PROBLEM OR DISABILITY (2011) 136 TABLE 61: ESTIMATED POPULATION CHANGE IN POPULATION WITH LEARNING DISABILITIES 138 TABLE 62: ESTIMATED POPULATION CHANGE IN POPULATION WITH MODERATE OR SERIOUS PHYSICAL DISABILITY 138 TABLE 63: ESTIMATED POPULATION CHANGE IN POPULATION WITH MENTAL HEALTH PROBLEMS (THOSE AGED 18-64) 138 TABLE 64: BLACK AND MINORITY ETHNIC POPULATION (2011) 139 TABLE 65: HOUSEHOLDS WITH DEPENDENT CHILDREN (2011) 143 TABLE 66: HOUSEHOLDS WITH NON-DEPENDENT CHILDREN (2011) 146 TABLE 67: INDICATIVE NEED FOR DIFFERENT DWELLING SIZES (2011-36) 157 GL Hearn Page 7 of 158 Quality Standards Control The signatories below verify that this document has been prepared in accordance with our quality control requirements. These procedures do not affect the content and views expressed by the originator. This document must only be treated as a draft unless it is has been signed by the Originators and approved by a Business or Associate Director.