Development – 2018/2019 SPOTLIGHT Bedfordshire: Savills Research Unlocking potential Housing market Development opportunities Infrastructure upgrades Market Overview Market Overview Underdeveloped, affordable Housing market Figure 2 Average transaction values, year to August 2018 Bedfordshire’s housing market has seen a and with a strong outlook strong recovery since the global financial crisis, with prices now 39% above their Bedfordshire sits in the centre of one of the UK’s most exciting growth previous 2008 peak according to Land opportunities that will deliver innovation, infrastructure and sustainable Registry data. It has outperformed both the economic and housing growth East of England region and the wider country over this time frame, driven by healthy local Bedfordshire is a county with diverse be a key part of this and continue to improve economic activity and excellent connectivity, characteristics. It ranges from small, rurally connectivity in the region along with the Sectoral particularly to London. Despite this, much of set commuter towns, such as Sandy, to the expansion of Luton airport. Bedfordshire still looks relatively affordable, Bedford strengths much more urban and densely populated The strength of the location has been with house prices and house price to earnings Luton. What is consistent across the county recognised by a number of high-growth ratios in Luton and Bedford lower than the is relative housing affordability and excellent global businesses that operate in the area and regional average. strategic location. are thriving. The three unitary authorities Luton is the most affordable of the main Bedfordshire’s strength as a location is that make up the county, Bedford, Central population centres, with a median house multifaceted. It has excellent links to London, Bedfordshire and Luton, have all developed price to median earnings ratio at 7.5, below with journey times into Kings Cross St their own significant local sector strengths. the England average of 7.8 and 9.7 in the East Pancras as quick as 24 minutes from Luton Employers are also attracted by of England. It has an average house price of and less than 50 minutes from most other Bedfordshire’s positive demographic picture. £239,800 compared to a national average towns in the county. It has seen population growth of 8.0% since Bedford of £294,700. A location with this level of Central Bedfordshire It is situated in a central area in the heart of 2011, significantly outperforming the national Aerospace, Electronic affordability is rare given its strong and the Cambridge-Milton Keynes-Oxford growth rate of 4.35% (ONS) and it has a strong local Engineering, Creative improving connectivity to London and other corridor, which is one of the most innovative labour pool with high levels of employment. Industries, Food key locations. and economically successful parts of the Bedfordshire’s outlook is also strong, with Central Bedfordshire is the least affordable & Drink, Research Average transaction UK. The corridor has huge opportunities for base-case population and employment growth of the three authorities, having seen values (year to & Development, further growth and the support of central projected to be higher than both national and affordability decline the most during the August 2018) Manufacturing government. Improved infrastructure will regional projections. recovery period. Its house price to earnings ■ Below £200,000 Luton ratio is now 10.4, compared to 7.4 in 2008. ■ £200,000 - £300,000 ■ £300,000 - £400,000 Figure 1 Population growth rate With an average house price of £332,500 it ■ £400,000 - £500,000 Bedfordshire England and Wales East of England is the only authority in Bedfordshire higher 125 ■ Over £500,000 than the East of England which has an average house price at £329,500. However, it remains a significantly more affordable location Source Land Registry, OS 120 Central than the neighbouring local authorities of homes in the authority are than the East of England average Bedfordshire Aylesbury Vale and South Cambridgeshire, relatively affordable within the but higher than the national average. 115 High Performance which both have house price to earnings ratios wider market context. Of the main towns, Leighton Buzzard of over 11. Bedford’s affordability is in and Dunstable have experienced the Technologies, Research High values in Central Bedfordshire’s between that of Central Bedfordshire most house price growth since the & Development, Visitor 110 villages and towns such as Sandy and and Luton, with a house price to previous peak, both seeing a 44% Economy, Transport Biggleswade contribute to its house price earnings ratio of 9.3. Average house increase, with Luton at 40% and & Logistics, Agrifood to earnings ratio. Nevertheless new prices are £303,300, which is lower Bedford lagging slightly at 35%. 105 Population growth (2007-2027, 2007 base) 2007 (2007-2027, growth Population Figure 3 House prices vs 2008 peak 100 Bedford Luton Central Bedfordshire 2011 2021 2017 2012 2015 2013 2018 2016 2019 50% 2014 2010 2027 2022 2025 2023 2024 2026 2007 2020 2008 2009 40% Source Oxford Economics 30% 20% In many ways the picture is very positive and there is 10% Luton certainly a wealth of opportunity for future growth. 0% Air Transport, Creative -10% The county does, however, face challenges. The ability to Industries, Business -20% deliver on its growth potential will require the provision Services, Logistics, Vans -30% of a substantial amount of new housing, in addition to 2008 peak change since Price Jul-2011 Jul-2012 Jul-2013 Jul-2015 Jan-2011 Jul-2014 Jul-2010 Jul-2017 Jul-2016 Jul-2018 Jan-2013 Jan-2014 Jan-2012 Jan-2015 Jul-2008 Jul-2009 Jan-2010 Jan-2016 Jan-2017 what is currently planned Jan-2018 Jan-2008 Jan-2009 Source Land Registry 2 3 Market Overview Development Land Housing delivery Figure 4 Housing delivery against existing plan targets Housebuilding exceeded adopted local plan targets in 2017/18 in all Luton Development the local authorities in Bedfordshire, ■ Luton UA Local Plan Target OAN 1,000 Figure 5 Residential Development Pipeline although Luton delivered far less land and than its Objectively Assessed 900 Number of Housing Need. It has struggled to residential units 800 bring brownfield sites forward, as planning 2,000 700 4,000 a result of viability challenges. Its 6,000 tight urban boundaries and lack of 600 A step change is required greenfield alternatives within the to meet Government's ● Draft Allocation 500 ● Allocation authority mean that more needs to growth ambitions ● Outline Permission be done to bring forward brownfield 400 ● Permission ● Under Construction opportunities as part of the solution. Number of homes The Government has identified a ‘once in a 300 ■ Green Belt Currently, Luton is the only one generation opportunity’ to unlock major new 200 of the three authorities without a development and economic growth in the Bedford Housing Infrastructure Fund bid, 100 Cambridge-Milton Keynes-Oxford corridor a mechanism which could help to through infrastructure investment. 0 unlock brownfield sites. 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 The National Infrastructure Commission Inevitably, Luton is reliant on recommended in its 2016 report that strategic neighbouring authorities to pick up Bedford (pre NPPF plan) infrastructure investment needs to be the housing delivery shortfall under married with locally led housing growth ■ Bedford UA Local Plan Target OAN the Duty to Cooperate. The majority 1,400 ambitions to ensure the area does not Milton Keynes of this lies with Central Bedfordshire fall behind its international competitors. and North Hertfordshire where there 1,200 Central government and Homes England are has been Green Belt release. proactively looking to engage on how this can 1,000 Looking forward, there is a be delivered through a range of measures, significant central government desire including new and expanded settlements. for local authorities in the Cambridge- 800 They have identified the requirement for Milton Keynes-Oxford corridor infrastructure investment beyond the current 600 to submit ‘ambitious proposals pipeline and designated the corridor a key Stevenage for further growth’, as part of the Number of homes economic priority. Notably there is up to Luton 400 Government ambition of seeing one £4.1bn available for forward funding housing million homes built in the corridor by infrastructure nationally. 2050, to realise its growth potential. 200 The potential difference in economic growth Across the corridor, delivery outcomes from more significant and ambitious 0 will need to increase by 63% against 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 intervention and investment compared to the the level achieved in 2017/18 for its baseline case is enormous (Figure 6). Source Savills Development Database growth potential to be unlocked Central Bedfordshire (pre NPPF plan) Figure 6 Unlocking the growth potential across the corridor by different levels of intervention and Bedfordshire has the land, the ■ Central Bedfordshire UA Local Plan Target OAN affordability, the economic base and 2,000 Scenarios Job Growth Economic Impact significant new transport investment 1,800 to play a key role in filling that gap. Business as usual +1.9% 1Existing levels of housing delivery, current and +335k Central and local government 1,600 confirmed infrastructure investment only. pa GVA need to reach a place where they 1,400 see mutual interest in delivering on Incremental enhancements 1,200 this ambition. 2The housing requirements identified in SMHAs are met. An increase in population is realised in line +2.4% 1,000 with the ONS high migration projection. Transport +720k infrastructure investments are made above and beyond pa GVA 800 the existing plans. Several existing constraints to Number of homes economic growth are relieved. 600 63% 400 Transformational enhancements Across the corridor, 3Housing investment is such that population grows delivery needs to increase well above the ONS high migration scenario.