With the North West boasting the third highest population of all the English regions, 7.1m people, and the highest population density outside of London – 489/sq km – should we really be concerned about the much reported housing shortage?
The latest ONS projections suggest a clear requirement to provide for 538,000 new households up to the year 2033 – that is some 21,500 households a year. Sadly, however, the rate of housing completions over the past four years has averaged at 11,193 a year, which is 48% of the average rate required by the Regional Special Strategy and only 52% of the projected rate of increase in households. Indeed, the housing completion rate in the North West since 2008 has plummeted faster than in any other region and has averaged only 61% of the build rate achieved in the period 2000 to 2008, whereas the corresponding recent performance rate for England is 81%.
This matters because the lack of house building is causing an increase in concealed households, young adults living with their parents and in-laws, a loss of construction jobs across the region and a lack of competitiveness when up against regions such as the Midlands. Our failure to improve the region's ageing housing stock the oldest outside London as well as failing to provide sufficient housing in high demand areas – such as Cheshire, Ribble Valley and South Lakeland – and in low demand areas where it could kick start wider regeneration – such as Blackpool and Blackburn – means that our labour market has effectively been immobilised through a lack of choice in quality and range of housing. This has resulted in the North West having a much lower rate of population gain than would otherwise have been the case; in fact, we have achieved the lowest gain in population since 2001 of any of the English regions, except the North East.
Crucially, the lack of house building is perpetuating an unnecessarily high house price to average earnings ratio, with all of the attendant problems of lack of affordability.
At a national level, many commentators have suggested that there are three key factors which explain why we are not building enough homes:
- A failure of strategic planning to set high enough building targets – which doesn't apply to most of the North West as most authorities continue to follow the RSS targets, although the Government's intention to abolish the RSS does not help.
- The lack of mortgage finance – which is a false argument that disguises the real problem of the house prices to salary ratio remaining too high, so that deposits are not affordable. Indeed, in the period 2001 to 2007, the boom in mortgage lending led to rising land and house prices, but much lower levels of increase in the rate of house building.
- Land banking by house builders – the national reports and accounts of volume house builders suggest that they typically have land banks of four to seven years, which seems a little high and will surely be contributing to the lack of development activity.
Having considered the predicament the region is in; I have four key recommendations that would help to improve house building performance.
Firstly, we need to increase the supply of easy to develop greenfield sites not Green Belt in urban edge locations. The region has been far too reliant on difficult to develop brownfield housing sites – 83% of completions over the past 20 years, compared to around 74% for England as a whole – which has led to high density, poor quality housing which is nevertheless too expensive.
Secondly, we need to improve the quality of the housing stock by reducing densities – the density of house building in the North West has risen from 25 per hectare in 1995 to 41 per hectare in 2010 and, as Sir Raymond Unwin said in 1926, "there is nothing to be gained from overcrowding". The region could meet its housing needs up to 2033, and still reduce density to an average of 30 dwellings per hectare, with a consequent increase in the urban area of just 1.3 percentage points i.e. from 10.9% urbanised, to just 12.2%.
Thirdly, it is important to support new entrants coming into the house building market and favour developers with land banks of less than three years when disposing of public land. This would encourage more house completions and discourage developers from sitting on key development sites year on year.
Fourthly, we need to look at the diversity of our new housing stock and foster better design solutions that embrace an increase in useable floor space – no one wants to live in a shoe box that's identical to the one next door, so this approach should stimulate movement in the market place and hopefully attract more people to live in the North West.
None of these are quick fix solutions, but with the help of local authorities and a co-ordinated response from the large volume builders to work together to improve the quality of the stock they are producing, there is a real chance to make a positive impact on the region going forward in terms of job creation, a boost to the regional economy and most importantly a wealth of suitable, affordable housing for everyone.
- Mike Holliss is a partner at hollissvincent, planning and development consultancy, in Manchester