New estimates of housing
requirements in England,
2012 to 2037
Neil McDonald
and Christine
Whitehead
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Alan Holman’s Legacy
 Alan first made estimates of housing demand and need in 1970 - to inform central
government of housing supply requirements necessary to achieve given housing
standards together with the need for subsidy;
 Major development of the model for the Housing Policy Review in 1977;
 Alan continued to provide these estimates whenever new household projections
were made available - both in government and from independent organisations,
including the TCPA;
 Alan’s last estimates of housing demand and need were based on the 2011
household projections. These, although recognised as less strongly based than
usual, were important and well used, particularly by local authorities to support their
local plans;
 Alan was looking forward to being involved in these latest projections;
 These are more strongly based in the latest evidence - but until now can only deal
in detail with requirements, not with issues of affordability.
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The Headline Story
 The 2012 based projections suggest that, if past trends
continue, we will need to build an extra 222,000 homes each
year from 2011 – 2031;
 This is less than earlier projections BUT ONLY because
household growth has been restricted by lack of supply and
problems of affordability - at least for the last decade and for
younger households for a quarter of a century;
 So far since 2011 we have built only 54% of the homes
required – so if we were to try to catch up by 2021 we would
need to build over 300,000 each year;
 This compares with 138,000 starts and 125,000 completions in
England in 2014/15.
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The 2012-based household projection
Household projections based on:
ONS population projections: 2012-based
DCLG’s household formation rate projections.
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How the population projections have
changed
 2011 census found more
people than previously
expected
 2012-based projections
therefore start from higher
base population in 2012
than assumed in last prerecession set of household
projection – the 2008based projections
 But rate of population
growth not dissimilar from
2008-based projections
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How the household formation rate projections
have changed
 2011 census found fewer
households than expected:
2008-based projection had
over-estimated household
formation rates
 In break from past trends
aggregate household
formation rates were virtually
flat between 2001 and 2011
 2012-based projections
envisage return to
increasing household
formation rates – but not for
everyone
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Winners and losers
 Projections envisage that
there will be more than
enough extra households
formed to allow all groups
to have greater chance
of setting up a separate
household, but that is
almost certainly not what
will happen;
 Some groups –
particularly, singles over
30 will be ‘winners’ and
couples in their 20s and
30s will be ‘losers’.
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Couples in 20s and 30s are the big losers
 Falling household formation
rates since 1991
 Household formation rates
continued to fall in ‘boom
years’ to 2007
 Whilst recession may have
exacerbated decline,
clearly other factors in play
 Projections suggest
continuing decline, but at a
slower rate
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Structural change or temporary blip?
 20% of the change arises from a higher proportion of couples than
previously expected
 Unlikely to be result of economic pressures and therefore unlikely to be
significantly reversed
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Structural change or long but temporary blip?
 Some falling household formation rates date back to 1991 e.g. couples
(see earlier slide) and London aggregate rates (above)
 Range of factors unrelated to recession e.g. affordability; student debt;
changing employment patterns. Some yet to bite fully
 Change of direction in household formation rates in 2011 looks optimistic
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Stage 2 Results
 Stage 2 results provide insight
into changes in household types
– a similar picture looked at from
a different angle
 Stage 2 headship rates show
proportions of age group who
will head households of different
types
 25-34 chart reflects similar picture
to that shown by Stage 1 results:
declining couple headship rates
due to falling proportion of
couples in the population and
falling household representative
rates in this age group
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Stage 2 Results
 Stage 2 results for 7584 year olds show
small reduction in
overall headship rates
i.e. average
household size in this
age group rises
 Note dramatic
change in proportions
of single women and
couples: due to men
living longer so that
couples survive as a
couple for longer
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Regional variations
 North-South divide: little
departure from earlier HRR
trends in north; falling HRRs
in London
 Also significant differences
in population increase
projections
 NE households to increase
by 11% 2011-31; London by
33%
 55% of homes required
need to be in London, East
and South East
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Using the projections (1)
 Projections are not forecasts: they tell us what will happen if
past trends and constraints continue;
 2012-based household formation rates are probably the best
we can achieve for land use planning purposes ;
 But there are reservations about population projections on
which the household numbers are based:
Net international flows may be too small;
Flows within UK are based on 2007-12 – a period which
was affected by the recession;
Need to take account of local factors.
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Using the projections (2)
 Households will only form if there are homes for them to live in;
 To date (2011-15) only about half the homes needed have
been built; household formation rates are therefore almost
certain to be below those projected;
 To catch up by 2020 would require an average of 312,000
homes a year for the next 5 years;
 Practical constraints: e.g. London almost certainly cannot
accommodate 33% more households over 20 years ;
 Projections can only be starting point for planning.
Conclusions
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 The household projections reveal longer term downward
trends for some groups from at least the early 1990s reflecting
changing economic and social conditions;
 Even so they suggest that most household groups will be
better housed in 2031 than in 2011;
 But this can only happen if we build at least 222,000 new
homes a year to meet new household projections to 2031 –
starting in 2011;
 Over a half of these need to be for London and wider south
east;
 We are already way behind – we need strategies at local
and national level to generate a step change in housing
investment.