Housing need based on flawed household formation numbers!


When the Local plan was being produced it was apparent that the household projections used to calculate future housing growth were flawed resulting in an over-estimate of future households and houses. * Nevertheless the Local Plan proceeded to use flawed data. At an England level the outcry is to ‘build more houses’ with it seems everyone calling for a minimum of 250,000 and up to 300,000 houses a year.

These figures are incorrect. Ian Mulheirn has explored the reasons why the household projections are wrong. He finds that a “most roads lead back to the late Alan Holmans’ 2013 paper (and those that don’t, appear to offer no source for their projection). Holmans reached a ‘need’ estimate of 243,000 per year, of which 225,000 was projected household growth, with the other 19,000 the number of dwellings required to maintain the proportion of second and vacant homes.” And these figures were based on DCLG data.

Here the problem was that household formation projections assummed that households would continue to get smaller “But the evidence we have suggests that English households — in keeping with most other developed OECD countries — stopped shrinking around the start of this century.” DCLG thought that the recent stability in household size was an aberration and ignored it in thier projections. “According to the most recent DCLG forecast, average household size in 2016 should have been 2.33. But the ONS’s estimate has it at 2.39. Largely because of this difference, ONS surveys suggest there were fully 600,000 fewer households than DCLG had predicted.”

Mulheirn counters the argument that household formation has been restricted due to a lack of housing supply. “At this point you may be wondering whether the reason the projections haven’t been borne out because there haven’t been enough houses for households to form into. This is hard to square with the fact that, far from bumping up against a sluggish rate of new supply, household formation in England has lagged new supply by an average of 26,000 per year since 1996. What’s more, England’s households are already among the smallest in the OECD, and the end of the shrinking household trend appears to be a global phenomenon.”

To reiterate, we dont need 300,000 houses or even 250,00o or even 200,000 new houses a year. Current supply is adequate!

View story at Medium.com

* Leaving aside at this point issues relating to in-migration, second and holiday homes.

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