How developers should react to the ONS household projections bombshell
On 20 September, the Office for National Statistics (ONS) threw a hand-grenade into the housing debate. Overnight, we went from a dire housing shortage to the happy news that the UK is building even more homes than we need.
Their Household projections in England report suggests that we need only a little more than 200,000 additional dwellings each year. That’s far short of the numbers local authority targets are currently based on.
For councils preparing local plans the effect is huge. Greater Manchester held off publishing its Spatial Framework (the GMSF) for the ONS figures and the new draft is likely to drop many of the more controversial Green Belt sites thanks to these reduced household numbers.
Across the country, Green Belt campaigners and politicians of all colours are rejoicing. They have taken the news as proof that they will not need to build nearly so many new homes.
Are we really building more houses than we need? That might come as a surprise to the many people in their 20s and 30s struggling to get on the housing ladder, or having difficulty finding homes to rent.
It will also come as a surprise to the politicians who fought the last election on a promise to build up to 300,000 new homes a year. The ONS figures are being taken to mean the real annual requirement is 210,000, fewer than the 217,000 new dwellings actually added in 2016/17. Some areas – such as Cambridge – are discovering they need build no more homes at all.
What is really happening?
Our advice to both developers and local authorities is don’t make any drastic decisions just yet.
First, the ONS household projections may not mean what you think they mean. Here’s what the ONS itself says about them:
Household projections are not forecasts and generally take no account of policy or development aims that have not yet had an impact on observed trends… Household projections should be thought of as a trend-based starting point for analysis, providing data produced on a consistent basis for England, its regions and local authorities.
The ONS figures say, in effect, that if nothing else changes and current trends continue, here’s how many households we’ll have in the future.
But things are going to change. The ONS explicitly says that its figures do not account for economic growth. So if people in your area are saying “These ONS figures show we don’t need to build more houses,” and also saying “We want to boost our local economy and create more businesses and jobs,” those numbers won’t add up.
Second, it is unclear how the government will convert the ONS household projections into housing targets. The delay between the ONS figures coming out and the government telling us what they mean is unfortunate. Responsibility for the figures moved from the Ministry of Housing, Communities and Local Government to the ONS last year, which may have resulted in balls being dropped.
Will a government pledged to build 300,000 homes annually switch to 210,000 on the basis of one ONS projection? It seems unlikely. And if they don’t, the big drops in housing requirements could just as quickly be reversed.
It’s entirely possible that we will go into the New Year with housing figures back up to previous targets. The wise approach is to wait.
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