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The latest population projections and their implications for housing need

The 2014-based Sub National Population Projections (SNPP) for England were published by the Office for National Statistics (ONS) on 25 May 2016. These project population growth in each English local authority over the 25-year period 2014 to 2039 and replace the 2012-based projections.

Nationally, the population is projected to grow at a faster rate than previously calculated, adding nearly 300,000 more people than anticipated by the 2012-based projections.

This boost is primarily due to revised projections of migration into the country and although a relatively small change overall (increasing population growth from 8.7m to 9.0m) it will inevitably put upward pressure on housing need assessments and latent demand, because more people will inevitably want to be housed.

This is particularly the case for London and the South East, where, over the 25 year period the projections are boosted by 135,000 persons and the West and East Midlands, where the uplift is 100,000 persons.

To put that in context, the West Midlands needs to accommodate the equivalent of one and half more Wednesburys than previously expected, with the East Midlands needing another Coalville. In London and the South East, there is a need to accommodate the equivalent of two and half more Royal Tunbridge Wells.

In total, 56% of districts (183) see their population growth increased, with the ‘winners’ tending to be in and around metropolitan districts, including Bristol, Birmingham, Leicester, Manchester and Liverpool.

The implications for housing need

The 2014-based population projections will play an important role in determining future housing needs, because they underpin CLG’s local household projections, which according to PPG should provide the starting point for assessing housing need. They are also the minimum level of population growth under the Local Plan Expert Group’s recommendations for a simplified assessment of need process.

The corresponding 2014-based local household projections are due to be published in June/ July 2016 (provisional). It is anticipated that when they are published, projected household growth is likely to be higher than seen in the current CLG 2012-based household projections due to the higher population growth of the 2014-based SNPP underpinning them.

Whether the forthcoming local household growth projections are higher than the previous set will depend not just on the local population projection, but also on the projected rate of household formation. Since about 2001, household formation rates have been lower than expected, with the 2011 Census confirming that the household formation rate trend had changed, because average household size appeared to be no smaller than it was in 2001.

This altered trend informed the 2012-based household projections, which assume that household sizes will be larger than previously anticipated, or to be precise, average household size will be greater in 25 years’ time than was expected before the 2011 Census was published.

The trend towards increased household size - and falling rates of household formation by young people – has mirrored the deteriorating affordability of housing. Since 2012, the affordability of housing has worsened. It is entirely possible that the 2014-based household projections, which are trends based, will show further reductions in the ability of young people to form households. The latest data – released at the same time as the 2014-based population projections – shows that affordability has continued to worsen. The implication of this new evidence is that supply is falling further behind demand and the housing crisis is deepening.

Nationally, the median affordability ratio for England reached 7.5, meaning that the average house now costs 7.5 times the average gross salary, up from 6.9 in 2013. Locally, 84 districts now have a ratio of 10 or more (up from 49 districts in 2013) and just 27 districts across England have ratios lower than 5; the maximum income multiplier that mortgage providers will typically lend to an individual.

The upshot of new population projections that assume greater growth than the previous series and the further deterioration in affordability revealed by the latest data from ONS is that whatever the forthcoming local household projections reveal, true housing need will inevitably be greater in most English districts.

Article by James Donagh, Barton Willmore

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