Understanding the need for new housing across England

This article focuses on understanding and interpreting projections of household formation, which are published periodically by the UK government

'The projections are not forecasts, estimates or predictions. They are based entirely on what might be expected to occur if previous trends continue and are heavily dependent on the assumptions involved. Such trends can and do change...' The Rt. Hon. John Prescott MP on the 1999 household projections, Hansard, 29 March 1999, column 471

Latest projections
In mid March 2006 the government published projections for the number of households expected to form in each English region over the next 20 years. These are the first nationally published projections to take account of 2001 census data, and are likely to influence the national debate about how many new homes are needed and where they should be built.

Anyone interested in sustainable development and in particular how many houses are needed, and where, may find it useful to have an understanding of how projected numbers are arrived at, and alternative possible assumptions and approaches.

Trend-based projections
In order to calculate the household projections a number of assumptions are made, in respect of:
 * 'natural' population change - due to changes in births and deaths
 * net immigration from overseas
 * internal migration - from one region to another
 * the changing size and type of households that people live in, as they make choices to live with others (marriage, cohabitation) or on their own

The assumptions made with regard to the last two of these can have significant influence on the resulting pictures of housing need portrayed by the projections. Assumptions made about the changing size and type of households can significantly affect the apparent total size of housing need. Assumptions about internal migration can have significant impact on what the projections suggest about where housing might be needed. Small changes in the assumptions and data used can significantly affect the resulting projections.

A wide range of factors, such as changes in interest rates, household incomes and welfare benefits, can profoundly affect household formation rates. So can changes in national and local policy, lifestyles and the cost and availability of housing. There have also been concerns about the reliability of data, particularly at a sub-regional or local level.

Some interest groups, for example, CPRE, the Campaign to Protect Rural England, do not accept the fundamentally unsound assumption that we should plan the future simply on the basis of what has happened in the past. According to the CPRE: "The Government officially abandoned this 'predict-and-provide' approach to planning for housing in 2000 in favour of a better-informed approach using the principles of 'plan, monitor and manage'. A crude 'predict and provide' approach conflicts with the emphasis in the Government's recent planning reforms to work towards a vision for the future of communities and their environment."

North / South balance
CPRE is understandably concerned about environmental consequences of future house bulding on the countryside, but there are also questions about the appropriate balance between the north and south of England, for example in response to possible future drought in the South East and other strategic concerns (such as regeneration of particular areas and regions). There's the question of how much this balance is in effect simply a policy choice.

Circular projections?
CPRE argue that the supply of housing influences the demand for it:. "Constructing new private housing in an area actively encourages in-migration, which in turn can lead to further demand in the future. Thus if planning and housing policies encourage a major exodus from larger towns and cities, that will lead to ongoing demand for new homes in the more rural areas in future decades.

Since 2000, Government policy on planning for housing has secured important and valuable successes, including an increase in the proportion of new housing on previously developed ('brownfield') urban sites to over 70% and less wasteful use of housing land, with the average density rising to 40 dwellings per hectare. At the same time housebuilding levels have been rising; in 2005 they reached the highest figure for 16 years.

A return to a 'predict and provide' approach based on mechanical projections of past trends would undermine these achievements. This would lock us into a cycle of urban decline and countryside sprawl, with potentially grave social and environmental consequences."

An alternative approach
CPRE argue that "the key relationship is between the total number of households and the total housing stock. Using data from the 2001 census, Alan Holmans (an acknowledged expert in this field) has estimated a current surplus of housing over households in every English region with the possible exception of London. Estimates of the number of new homes needed should look at the total housing stock, vacancy rates and other indicators of the efficiency with which it is used, such as under-occupation."

CPRE believes that in responding to household growth public policy should become less dominated by trend-based projections and take greater account of the implications for future lifestyles, quality of life and the quality of the environment. This requires a new approach to housing supply which takes as its starting point the Government's Sustainable Development Strategy and the recognition that development must respect environmental limits. Based on an understanding of the environmental capacity of places to accommodate new development and persistent regional disparities, this approach could take greater advantage of opportunities for urban renewal to meet wider social, economic and environmental objectives.