Analysis of Strategic Housing Market Assessments in the West Midlands

Transcription

1 Analysis of Strategic Housing Market Assessments in the West Midlands Stage 2A: Sub-Regional Analysis June 2010

2 Analysis of Strategic Housing Market Assessments in the West Midlands Stage 2A: Sub-Regional Analysis May 2010 ECOTEC Vincent House Quay Place Edward Street Birmingham B1 2RA United Kingdom T F ECOTEC Analysis of Strategic Housing Market Assessments in the West Midlands: Stage 2A

3 Contents PAGE 1. Introduction Study aims The six sub-regional Strategic Housing Market Assessments Approach and methodological considerations Central 1 HMA Key characteristics of the HMA Affordable housing need Central 2 HMA Key characteristics of the HMA Affordable housing need Central 3 HMA Key characteristics of the HMA Affordable housing need North HMA Key characteristics of the HMA Affordable housing need South HMA Key characteristics of the HMA Affordable housing need West HMA Key characteristics of the HMA Affordable housing need Approach to providing additional housing need outputs Appendix 1: Household Projections Appendix 2: House Prices and Sales ECOTEC

4 Appendix 3: Use of REEIO Economic Projections Appendix 4: Bedsize requirements: alternative conversion methodology ECOTEC

5 1. Introduction 1.1 Study aims The West Midlands Regional Assembly (WMRA) commissioned ECOTEC in November 2008 to consider the implications of the six Strategic Housing Market Assessments (SHMAs) produced by sub-regional housing market partnerships between 2006 and This report follows on from the stage one technical report completed by ECOTEC in January 2009, which focussed on the consistencies and inconsistencies in the methodological approaches taken to generate housing need figures in each of the six SHMAs. In stage two the focus shifts from methodology to key messages. The six sub-regional Strategic Housing Market Assessments were completed by four different consultants and differ in level of analysis and style of reporting. This stage two summary report revisits the assessment reports to ensure that stakeholders in all sub-regional Housing Market Areas (HMAs) have access to the same level of detail, presented in a consistent manner for ease of comparison. The report provides a narrative account of the key issues identified by each of the Strategic Housing Market Assessments completed between 2006 and In particular it provides a summary of the key figures on need for, supply of, and shortfall in provision of affordable housing. This includes a synthesis of findings with regard to the household profile of those in need of affordable housing and an analysis of the type and tenure of housing needed. Stage two is itself divided into two parts. The first part, the subject of this report, synthesises the evidence at the sub-regional (housing market area) level. The second part explores and presents evidence from the Strategic Housing Market Assessments at the local housing market area level. The report has been published by the West Midlands Leaders Board, the successor body to West Midlands Regional Assembly. 1.2 The six sub-regional Strategic Housing Market Assessments The following six Strategic Housing Market Assessments covering the West Midlands were produced in 2007 and 2008: Central 1 HMA: covering the 4 districts of Birmingham, Lichfield District, Solihull, and Tamworth; published by Outside Consultants, August Central 2 HMA: covering the 4 districts of Coventry, North Warwickshire, Nuneaton & Bedworth, and Rugby; published by Outside, April Central 3 HMA: covering the 7 districts of Dudley, Sandwell, Walsall, Wolverhampton, Cannock Chase, South Staffordshire, and Telford and Wrekin; produced by ECOTEC Research & Consulting, July ECOTEC

6 North HMA: covering the 5 districts of East Staffordshire, Newcastle-under-Lyme, Stafford, Staffordshire Moorlands, and Stoke-on-Trent; produced by Outside Consultants, April South HMA: covering the 6 districts of Worcestershire (Bromsgrove, Malvern Hills, Redditch, Worcester, Wychavon, Wyre Forest) and the 2 districts of South Warwickshire (Avon and Warwick); produced by Rupert Scott on behalf of the South Housing Market Partnership, April 2007; updated with a Monitoring Report in May West HMA: covering the County (and Unitary Authority) of Herefordshire and the five (ex-) districts of Bridgnorth,, North Shropshire, Oswestry, Shrewsbury and Atcham, and South Shropshire; produced by Outside Consultants, June In April 2009 Bridgnorth, North Shropshire, Oswestry, Shrewsbury and Atcham, and South Shropshire amalgamated to form Shropshire Unitary Authority. Within the Central 1 sub-region additional Strategic Housing Market Assessment related work was completed for Birmingham ( Birmingham Strategic Housing Market Assessment 2007, Opinion Research Services February 2008) and Solihull ( Briefing Note 1 Solihull Housing Needs Calculation, ECOTEC February 2009). Figure 1.1 Sub-regional housing market areas in the West Midlands 4 ECOTEC

7 1.3 Approach and methodological considerations Most of the information presented in this report concerns key messages and outputs drawn from the six Strategic Housing Market Assessment reports. In addition to this, new work has been carried out in order to provide stakeholders in each sub-region with the same level of housing market information and so improve the consistency of the coverage of the various topics. This goes some way to addressing the gaps and deficiencies identified in stage one of the project. The information for each Housing Market Area is presented in two sub-sections. The first concerns key characteristics of the housing market. The second concerns the need for affordable housing. Key Characteristics of the Housing Market The information presented under this heading is grouped under the following four broad themes: demographic drivers, economic drivers, the housing stock and market dynamics and affordability. As well as reporting the key messages contained in the individual SHMA reports the latest available secondary data sources have been analysed to provide additional coverage, resulting in an update position for some key housing market indicators. The new evidence presented is drawn from the following sources: 2006-based sub-national population projections produced by ONS; 2006-based household projections produced by CLG (in March 2009); Regional Economy Environment Input Output Model REEIO, produced by the West Midlands Observatory & Cambridge Econometrics, which in turn makes use of Annual Business Inquiry (ABI) data produced by ONS; Housing Strategy Statistical Appendix 2008 (HSSA); CLG Live Tables on dwelling stock and price-income ratios; Completions and demolitions data provided by Worcestershire County Council s research unit; Repossessions data from the Ministry of Justice; The latest house price and sales data from the Land Registry, as posted online on the website of the BBC; Local Housing Allowance Rates provided by The Rent Service. Coverage of Housing Need This report provides an overview of housing need at district level within each Housing Market Area. The key outputs are drawn from the individual SHMA reports. The constituent components of need - current need (i.e. backlog ), newly arising need and the supply side components - are presented following the method of calculation used in each SHMA. However Stage One of ECOTEC s research revealed significant differences in methodologies and approaches taken in the six Strategic Housing Market Assessments of the West Midlands with regard to the way housing need was calculated. Three types of differences were distinguished: 1. Different sources were used to generate the various components of the needs calculation; 5 ECOTEC

8 2. There were variations in the way sources were used, including detailed technical aspects and thresholds; 3. There were fundamental differences in the treatment of key elements of the need calculation, often stemming from varying interpretations having been given to the Practice Guidance. Due to the complexity of the calculations and the fact that there are innumerable differences of all types across each of the Strategic Housing Market Assessments the ECOTEC Stage One research stated that it was not possible to pin down the exact effect of these differences in approach on the final figures produced. Nevertheless many of the differences were considered to be major ones which would almost certainly have a significant bearing on the outputs generated. In addition, the review identified gaps and inconsistencies with regard to the provision of breakdown figures on housing need across the 6 SHMAs. Specifically this concerned need broken down by household type, unmet need by dwelling type and size and tenure split outputs (social rent versus intermediate sector affordable housing). It was therefore the conclusion of the Stage One study that, due to the significant differences in the approaches taken to measure housing need, the results produced by the six Strategic Housing Market Assessments can not be considered to be truly comparable. They are therefore of limited use in providing a robust quantitative picture of need for the West Midlands as a whole. Due to the differences in methodologies one must either accept the Strategic Housing Market Assessment outputs at face value or consider a new top down study in which a consistent methodology is applied to all parts of the region. This Stage Two study does not attempt to rework the original housing need outputs that were signed off by the sub-regional partnerships. It is recognised that at the individual sub-regional level the SHMAs are valuable and essential evidences bases to inform Local Development Frameworks and Housing Strategies. We have not attempted to over-write or update the core outputs of the SHMAs. But additional work has been done to fill information gaps in some of the SHMA reports and to augment the scope of their analysis. These gaps concern the following three aspects of housing need: The type of households in housing need; The dwelling type/size breakdown of net housing need; Tenure split: the breakdown of need into requirement for social rented dwellings and intermediate dwellings. A technical summary of the approach taken to generating these new outputs is provided in Chapter 8 of the Report. 6 ECOTEC

9 It should be noted that there are some very minor numerical differences between some figures used in this report and the original SHMAs usually by only one unit. This is because of arithmetical rounding and apportionment that has been required. These differences are in no instance statistically significant. 7 ECOTEC

10 2. Central 1 HMA 2.1 Key characteristics of the HMA Demographic drivers The Central 1 Housing Market Area covers the districts of Birmingham, Lichfield District, Solihull, and Tamworth. The Central 1 HMA has a population of 1,352,500, more than a quarter of the total population of the West Midlands. Birmingham accounts for almost three quarters of people and households in the area. The population declined prior to 2001 and this was driven primarily by significant migration out of the Birmingham. Since 2001 the population of the sub-region has grown by 2.2%, which is above average for the region. Birmingham is currently experiencing a surplus of births over deaths but is losing population through migration. Lichfield District has benefited from high levels of in-migration. Growth in Solihull and Tamworth, although limited in scale, has been due to both natural and positive net migration. The age profile of Central 1 residents is much younger when compared to the rest of the West Midlands and this is due to a large proportion of younger people living in Birmingham and Tamworth. This indicates greater pressure for starter homes in these two districts. Figure 2.1: Age breakdown of the population of the Central 1 HMA (2006) 40% 30% 20% 10% 0% 0-19 years years years years 80+ years Central 1 HMA 27.4% 21.8% 31.8% 15.0% 4.0% West Midlands 25.2% 18.8% 34.1% 17.4% 4.5% England 24.3% 19.8% 34.6% 16.8% 4.5% ONS 2006-based sub-national population projections Solihull and Lichfield District have older population profiles which brings with it increased requirements for support to enable older people to stay at home as well as greater need for specialised accommodation. Under occupancy of larger stock by older households potentially deprives younger families of appropriate housing offer. 8 ECOTEC

11 When compared to the West Midlands as a whole the Central 1 HMA has a higher proportion of single person households, single parent households and other multi-person households. Couples with and without children are under represented. Figure 2.2: Breakdown of households in the Central 1 HMA by household type (2006) 40.0% 30.0% 20.0% 10.0% 0.0% One person households Couples, no child(ren) Couples w ith child(ren) Lone parent households Other multi-person households Central 1 HMA 32.4% 24.8% 24.4% 10.8% 7.5% West Midlands 30.5% 28.4% 26.9% 8.1% 6.1% England 31.7% 27.4% 26.5% 7.7% 6.7% CLG 2006-based household estimates and projections Looking ahead, the 2006-based population projections produced by the Office of National Statistics predict population growth in all age groups within the Central 1 HMA between 2006 and In relative terms the greatest growth is expected in the 80+ age band (+45%) followed by the age band (+21%) and the 0-19 age band (+16%). Figure 2.3: Population projection broken down by age band, Central 1 HMA 500, , , , , , , , ,000 50, years years years years 80+ years ONS 2006-based sub-national population projections According to the latest CLG household projections 2006-based projections (released in March 2009, following completion of the SHMA) the number of households in the Central 1 Housing Market Area will expand from 561,000 in 2006 to 680,000 in This represents an average grow rate of close to 6,000 per annum. 9 ECOTEC

12 The number of single person households is expected to increase by 44% between 2006 and 2026 while the number of lone parent households is expected to increase by approximately 32%. A full set of breakdown figures, with age and household type cross-tabulated, is provided in Appendix 1 of this report. Figure 2.4: Household projections by household type, Central 1 HMA 300, ,000 Households 200, , ,000 50, One person household 143, , , , , , , ,039 Couple household, no child(ren) 153, , , , , , , ,311 Couple household, w ith child(ren) 154, , , , , , , ,201 Lone parent household 33,760 42,510 52,002 60,853 67,152 72,750 77,102 80,060 Other multi-person household 42,979 42,044 40,286 42,127 44,407 46,025 47,579 49,666 CLG 2006-based household estimates and projections; additional modelling by ECOTEC The Outside assessment recommends new dwellings with at least two bedrooms to meet future requirements, as small households will demand reserve space to accommodate overnight guests and working from home for example. Economic drivers Banking, finance and insurance accounts for 22% of employment in the Central 1 HMA compared to 18% in the West Midlands as a whole. But the largest employment sectors are public administration, education & health (28%) and distribution, hotels and restaurants (24%). 10 ECOTEC

13 Figure 2.5: Employment by broad industrial group, Central 1 HMA (2006) 28% 5% 0% 12% 0% Agriculture and fishing Manufacturing 5% Energy and w ater Construction Distribution, hotels and restaurants 24% Transport and communications Banking, finance and insurance Public admin., education & health 22% 5% Other services ABI (ONS); Regional Economy Environment Input Output Model ( REEIO : West Midlands Observatory & Cambridge Econometrics) The spatial patterning of economic activity in the West Midlands has been described as shifting away from Birmingham to a belt encircling the conurbation, although it is expected that the future growth of employment will be primarily around the city centre of Birmingham, with further concentrations to the south and southwest of the city. Figure 2.6 Employment projections by broad industrial group, Central 1 HMA 250, , , ,000 50,000 0 Agriculture and fishing Energy and water Manufacturing Construction Distribution, hotels & restaurants Transport & communications Banking, finance & insurance Public admin., education & health Other services ABI (ONS); Regional Economy Environment Input Output Model ( REEIO : West Midlands Observatory & Cambridge Econometrics) There is significant variation in terms of economic output (GVA) per head of population. Birmingham and Solihull exceed the UK average and Solihull has experienced rapid growth - it had the fastest-growing sub-regional economy in the country between 1995 and 2004 (growth of 115% compared to total national growth of 58%). The proportion of the total population that is of working age ranges from 60% in Solihull to 64% in Tamworth (64.2%) and this reflects the older age profile of the population in Solihull. There is greater variety in the proportion of economically active members of the working age population. 11 ECOTEC

14 This ranges from 69% in Birmingham to nearly 87% in Lichfield District. Birmingham has the highest proportion of Job Seekers Allowance claimants. Mean household incomes in the Central 1 sub-region range from 22,200 in Birmingham s Aston ward to 46,300 in the Little Aston ward of Lichfield district a difference of 24,100. A high proportion (almost half) of the working population in Solihull and Lichfield District are categorised as senior managers and having professional occupations. The proportion in these occupational groups is significantly lower in Tamworth and Birmingham. The annual average earnings of full-time workers living in Birmingham is nearly 1,500 lower than the earnings of those working in Birmingham and this points to people in higher paid jobs commuting into the city from surrounding areas, including from Solihull and Lichfield District. In Tamworth and Lichfield District the opposite is true earnings by residence are 15.4% higher than earnings by workplace. This will add to affordability issues in these districts as the housing stock is serving a significant commuter population. In Solihull earnings by residence are almost the same as earnings by workplace, although they are the highest in the sub-region. Housing stock A greater proportion of dwellings in the Central 1 HMA belong to the social sector when compared to the West Midlands as a whole. However the tenure breakdown across the Central 1 Housing Market Area is extremely uneven with the proportion of social renting households ranging from 13.5% in Lichfield District to 27.7% in Birmingham. Owner occupation is correspondingly lower in Birmingham (60.4%) compared with the other local authorities. The proportion of private rented accommodation in Solihull, Tamworth and Lichfield is significantly lower than the regional average (9.8%) and the national average (12.0%). Solihull has the lowest percentage of private rented accommodation with 5.2% of housing stock. Figure 2.7: Dwelling stock by broad tenure, Central 1 HMA 0% 20% 40% 60% 80% 100% Central 1 HMA West Midlands England 77% 80% 82% LA stock RSL stock Other public sector Private sector HSSA 2008 The number of social sector dwellings in the Central 1 HMA has declined significantly during the past decade, from around 148,655 in 1997 to 127,800 in This has largely been due to Rightto-Buy sales of Local Authority stock. This decline, in combination with reduced rate of turnover of social sector dwellings has resulted in a sizeable reduction in the number of households able to access affordable homes each year. 12 ECOTEC

15 Figure 2.8: Number of social sector dwellings in the Central 1 HMA , , , ,000 RSL stock 100,000 80,000 60,000 40,000 LA stock 20, CLG Live Tables The predominant dwelling type in the Central 1 Housing Market Area is the semi-detached property which makes up 35% of the stock in Birmingham and to 40% of the stock in Tamworth. Birmingham has the greatest number of semi-detached properties in the UK. 38% of the housing stock in Lichfield District is detached, compared to just 8% in Birmingham. A high proportion of dwellings in Lichfield District and Solihull have four or more bedrooms, while smaller units (including flats and apartments) are more predominant in Birmingham. Gross completions in the Central 1 HMA averaged close to 4,700 per annum between 2001 and 2008, while demolitions averaged nearly 1,300 per annum. During this period the housing stock grew by an average of 1,123 per annum according to the figures supplied by Worcestershire County Council. This implies that there was a significant loss of stock through means other than demolition. Given the decline in the number of social sector dwellings, the overall net stock increase means there has been a large shift towards private sector stock in recent years. Figure 2.9: Completions and demolitions , Central 1 HMA 7,000 6,000 5,000 4,000 3,000 2,000 Gross completions Demolitions 1, /2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 Worcestershire County Council 13 ECOTEC

16 Market dynamics and affordability The average sales price varies considerably, ranging from 139,000 in Birmingham to 219,000 in Solihull (2 nd quarter 2009). Solihull has a large supply of highly valued detached properties which account for a significant proportion of the executive housing in the sub-region. But the average prices of semi-detached properties, terraced houses and flats were also higher in Solihull than in the other three districts. Average house prices increased by close to 65% in Birmingham, Lichfield District and Tamworth between 2002 and 2006, well above the average of 50% recorded in the region as a whole. Since the onset of the credit crunch towards the end of 2007 house prices have declined and the volume of sales has declined even more dramatically as shown in the following set of graphs (tables containing the underlying data are provided in Appendix two of this report). There is some sign of price stabilisation of the beginnings of recovery in the second quarter However pundits are divided on the question of whether or not this is sustainable, warranting close monitoring in the future. Figure 2.10: Average prices & number of sales Q to Q2 2009, Central 1 HMA 1,200 Detached houses 400,000 2,500 Semi-detached houses 180,000 Number ofsales 1, ,500 Q Q Q Q Q Q Q Q Terraced houses 350, , , , , ,000 50, ,000 Average price (red line) Number of sales 2,000 1,500 1, ,200 Q Q Q Q Q Q Q Q Flats and maisonettes 175, , , , , , , , ,000 Average price (red line) Number of sales 2,000 1,500 1, Q Q Q Q Q Q Q Q , , , , , , ,000 Land Registry figures as supplied by BBC.Co.UK Average price (red line) Number of sales 1, Q Q Q Q Q Q Q Q , , ,000 80,000 60,000 40,000 20,000 0 Average price (red line) 14 ECOTEC

17 In the Central 1 HMA as a whole the lower quartile price-income ratio rose from 3.33 in 1997 to 7.01 in 2006 before stabilising and easing slightly to 6.80 in In that year Lichfield had the highest ratio and Birmingham the lowest, although it was still greater than 6. Figure 2.11: Lower quartile price-income ratios Birmingham Lichfield Solihull Tamw orth Central 1 HMA CLG Live Tables In all areas of the sub-region lower quartile prices (a proxy for entry level housing) rose more steeply than both mean and median prices. This was felt most acutely in small property types such as terraces and flats. This has clear implications for those entering the housing market for the first time. Consistent with house prices in the owner-occupied sector, private rents in Solihull are considerably higher than in other parts of the sub-region. In Birmingham, Lichfield and Tamworth the difference between the costs of private renting and social renting is less marked than in England & Wales. Table 2.1: Local Housing Allowance Rates Central 1 HMA ( /week) Local Authority 1 bed self contained 2 bed units 3 bed units 4+ bed units Birmingham Lichfield Solihull Tamw orth Weighted average The Rent Service, September 2009 The number of mortgage possessions orders made by the courts against home owners in the Central 1 HMA has risen dramatically since 2003, culminating in more than 4,000 orders made in Landlord possession orders against tenants has been more stable, averaging 3,215 per annum between 2003 and 2008 (figures for the period prior to 2003 are not available). 15 ECOTEC

18 Figure 2.12: Mortgage and landlord possession claims leading to orders made, Central 1 HMA 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, st half 2009 Mortgage possession orders Landlord possession orders Ministry of Justice The requirements of special groups Over a fifth of residents in Lichfield District and Solihull are aged over 60 and the continuing ageing of the population clearly has major implications for the housing and support needs of older people. Pensioners living alone represent between 10% and 15% of households in each of the four districts, and many will need additional care and support services within the home. The higher proportion of larger sized accommodation in Lichfield District and Solihull translates into significant levels of under occupation of properties owned by older people. Although the average property size in Tamworth is smaller, under occupation is still the case for 41% of households. In addition, a strong message picked up during the SHMA stakeholder consultation exercise concerned the shortage of two bedroom houses and bungalows in Tamworth which was preventing some older households from downsizing. The view was that homes with a small garden were far more attractive to most than flatted accommodation. There was consensus that older people express a general preference for two-bedroom dwellings rather than one-bedroom dwellings. Members of black and minority ethnic communities make up more than one in three of Birmingham s population, in stark contrast to Lichfield District (3%). The housing decisions of BME households, certainly within Birmingham, are therefore a core element of housing demand and supply within the conurbation. An increase in the number and proportion of older people from established black and minority ethnic communities is expected. Population forecasts for Birmingham predict the number of ethnic minority residents aged 65 and older will increase from 21,000 in 2006 to around 36,000 in The impact of this demographic trend on services will depend to a large extent on how the care of the elderly is balanced within and outside the family. A challenge for understanding the impact of the BME population is that growth is partly made up of migrant workers, asylum seekers and refugees for whom numbers are not easily available. There has been significant growth in population from Eastern Europe A8 accessions states in recent 16 ECOTEC

19 years. The principal origins of new migrants into Birmingham were Poland (27%), India (9%), Pakistan (9%) and France (7%). In Solihull, 23% were from Poland and 12% were from India. Secondary research indicates that a large proportion of new arrivals will be in low paid, casual and temporary employment and are often housed in poorly maintained private rented homes, HMOs and even caravans. This will impact upon their decisions about when and where to establish longer term homes should their families be with them or be planning to join them. Research points to diversity between the housing needs and aspirations of different minority communities. This diversity within the BME populations is reflected in tenure preferences. For example owner occupation tends to be higher in Indian, Pakistani and Bangladeshi communities whereas Black Caribbean households in Birmingham are more likely to be housed in the social sector. Chinese and other ethnic groups show a higher proportion of households living in private rented accommodation. In addition to differences stemming from ethnicity and religion, significant differences are emerging related to factors such as age, income, education and style. Another finding is that the concentration of BME communities in some neighbourhoods has sustained the housing market and prevented its collapse in some of these areas. The share of households with at least one person with a limiting long-term illness (LLTI) ranges between 30 and 34% across the four districts. Among the older population (aged over 65) with one resident with LLTI, proportions are highest in Birmingham (12%) and Solihull (11%) followed by Lichfield District (10.5%) and then Tamworth (9%). Improving affordability for young people has been a major policy concern at national and local level. A number of schemes aimed at helping younger households into home ownership have been tried and Homebuy intermediate housing in Solihull has had high levels of take up compared to other local authorities. The Strategic Housing Market Assessment identified a shortage of flats and terraced properties in Lichfield District and Solihull to be a key concern with regard to the needs of younger households. The assessment noted further that social housing allocations policy may be a barrier to young people if they are not considered to be in a priority grouping. Private renting is often perceived to be a transient tenure. Rents are often too high and there is a lack of security of tenure. In addition private rented accommodation is unevenly distributed across the Housing Market Area. 2.2 Affordable housing need New housing needs calculation ECOTEC has identified major differences in the way housing need was calculated in the various Strategic Housing Market Assessments in the West Midlands and some gaps in analysis. In order to provide additional data for the sub-regions ECOTEC carried out additional work using the methodology applied in the Central 3 SHMA. Care was taken to base additional analysis on the core housing needs outputs calculated for the different SHMAs. The new work therefore does not over-write the original findings: it augments them where there were gaps. This method is fully- 17 ECOTEC

20 described in Chapter 8 and described in summary in Chapter 1. Please note that the references to Stages in some table captions refer to the official CLG Practice Guidance stages for SHMAs. Current housing need Current housing needs figures for C1 are taken from the C1 SHMA report Section 7; these figures are based on HSSA 2008: households on the housing register. Selections have been made by the consultants using points or housing needs bands (Birmingham, Lichfield and Solihull) and inability to afford market housing (Tamworth). Table 2.2 Stage 1: Current Housing Need Step Description Birmingham Lichfield Solihull Tamworth Central current housing need (gross) 16,777 1,656 2,412 1,246 22,091 Future housing need The data below is taken from C1 SHMA report Section 8; again based on an analysis of local housing register data; the figures concern the number of households in high priority (Birmingham, Lichfield and Solihull) and inability to afford (Tamworth). Table 2.3 Stage 2: Future Housing Need Step Description Birmingham 2.4 newly arising housing need (gross p.a.) Lichfield Solihull Tamworth Central 1 6, , ,907 Affordable housing supply The source used for affordable housing supply that is, the annual supply of social housing relets - is taken from the HSSA returns by the local authorities for Table 2.4 Stage 3 part 2: Annual Supply of Affordable Housing Step Description Birmingham Lichfield Solihull Tamworth Central Annual supply of social re-lets (net) 4, , Annual supply of intermediate units N/A Annual supply of affordable housing 4, ,924 Bringing the evidence together The summary table bringing together overall need for affordable housing, available supply, and calculating net need (on the basis of meeting backlog need over a five year period) is taken from Section 12 of the C1 SHMA report. The order of the calculation follows that of the CLG Practice Guidance. 18 ECOTEC

21 Lichfield Solihull Tamworth Central current housing need (gross) 16,777 1,656 2,412 1,246 22, Annual newly arising housing need 6, , , affordable stock available 3, , Annual supply of affordable housing 4, , a Net current need ( ) 13,552 1,381 2,052 1,006 17, b Annual backlog reduction quota 20% 20% 20% 20% 20% 5.1c Annual backlog reduction (5.1ax5.1b) 2, , d Gross annual need (5.1c+2.4) 9, , , e Net annual housing need (5.1d-3.8) 4, ,581 The table below breaks down gross housing need into proportions of the two components that make up the total figure (again assuming backlog need is met over a five year period) Table 2.6 Breakdown of gross annual need Type of need Current need (backlog reduction) Newly arising need Table 2.5 Stage 5: Bringing the Evidence Together Step Description Birmingham Birmingham Lichfield Solihull Tamworth Central 1 28% 28% 29% 37% 29% 72% 72% 71% 63% 71% Household composition and dwelling type breakdown The Central 1 SHMA only provides a breakdown of housing need by household type for Birmingham and Tamworth. The Tamworth waiting list displays a similar distribution of household types to that of the local authorities in the North HMA, with 54% being single people, 33% families (i.e. households with children) and 13% childless couples. The breakdown of the Birmingham waiting list has a number of differences. Firstly the share of single people is low just 39%. In Birmingham there are a high proportion of single parent households nearly a quarter of the total. There are also a large number of other households those that do not fit easily into the main four categories. Younger households are predominant among those currently in need in the Central 1 HMA. The share of those aged less than 36 is 58% in Solihull, 59% in Tamworth and 60%. There is a significantly lower share of younger households on the waiting list in Lichfield where more than half those on the list are older than 35, and 12% are older than 65. There relatively few older people on the Birmingham waiting list only 7% are older than 55 years of age. The Central 1 Strategic Housing Market Assessment also provided data on the gender of housing register applicants revealing a strong bias towards females. 56% of those on the Birmingham waiting list are females, rising to 61% and 62% in Lichfield and Solihull respectively. Tamworth is an exception as males and females are almost equal in number. The Central 1 SHMA used housing register input and lettings data to arrive at recommendations concerning the size of affordable dwellings required to meet need. This was then translated into a weighted requirement by weighting demand by the ratio of lettings to demand. The results for the sub-region as a whole are as follows: 19 ECOTEC

22 1 bed units: gross need 22,972 (57%), net need 20,082 (58%), weighted requirement: 36%; 2 bed units: gross need 8,632 (21%), net need 6,531 (19%), weighted requirement: 7%; 3 bed units: gross need 4,738 (12%), net need 3,870 (11%), weighted requirement: 5%; 4+ bed units: gross need 4,262 (10%), net need 4,194 (12%), weighted requirement: 52%. The above figures are heavily influenced by Birmingham which accounts for more than three quarters of gross need in the sub-region. The method used to calculate the weighted requirement is also very highly geared, resulting in a high recommended share of the largest sized units. The sensitivity of the method also results in a wide variation of weighted requirement at district level. For example the recommended share of units with four or more bedrooms ranges from less than 1% in Lichfield to 65% in Birmingham. As noted, the C1 SHMA report did not fully describe current need for affordable housing at a local authority level by the make-up of the household for all authorities. ECOTEC has carried out additional work, filling the gaps using (crude) averages from those local authorities in the region that did provide breakdowns of households on the housing register. Table 2.7 Current need broken down by household type Household types Birmingham Lichfield Solihull Tamworth Central 1 Percentage breakdown Single person households 39% 46% 46% 53% 41% Couples, no children 4% 9% 9% 13% 5% Couples with children 19% 18% 18% 18% 18% Single parent households 32% 23% 23% 15% 30% Other multi-person households 6% 4% 4% 1% 5% 100% 100% 100% 100% 100% Absolute numbers of households Single person households 6, , ,134 Couples, no children ,204 Couples with children 3, ,068 Single parent households 5, ,520 Other multi-person households 1, ,166 16,777 1,656 2,412 1,246 22,092 In terms of household composition, in particular there were substantial numbers in the 'other multiperson household' category. ECOTEC's methodology described in Sections 1 and 8 has been used to redistribute these. Table 2.8 Current need broken down with other multi-person households redistributed Household types Single person households Couples, no children Couples with children Single parent households Birmingham Lichfield Solihull Tamworth Central 1 7, , , ,263 3, ,296 5, ,901 16,777 1,656 2,412 1,246 22,092 Additionally, extra analysis using ECOTEC's methodology (detailed in Section 8 of this report) has been carried out to generate the household composition breakdown of newly-arising need 20 ECOTEC

23 Table 2.9 Household composition breakdown of newly-arising need Household types Single person households Couples, no children Couples with children Single parent households Single person households Couples, no children Couples with children Single parent households Dwelling type breakdown: supply The table below shows the supply of relets, broken down by type and bedsize an essential component of calculating future bedsize and type requirements. It is derived from ECOTEC analysis of CORE data, applied to the C1 SHMA supply figures. Table 2.10 Breakdown of annual supply of affordable housing Dwelling type/size 1 bed dwellings 2 bed flats 2 bed houses 3 bed houses 4+ bed houses 1 bed dwellings 2 bed flats 2 bed houses 3 bed houses 4+ bed houses Birmingham Lichfield Solihull Tamworth Central 1 Percentage breakdown 19% 17% 18% 19% 19% 8% 9% 8% 10% 8% 26% 42% 36% 36% 29% 48% 32% 37% 35% 45% 100% 100% 100% 100% 100% Absolute numbers of households 1, , , ,539 3, ,974 6, , ,907 Birmingham Lichfield Solihull Tamworth Central 1 Percentage breakdown 48% 30% 48% 39% 47% 22% 41% 25% 26% 23% 11% 14% 11% 14% 11% 18% 14% 15% 21% 17% 1% 1% 1% 0% 1% 100% 100% 100% 100% 100% Absolute numbers of dwellings 2, ,761 1, , , , ,924 Matching household types, dwelling types and dwelling sizes The final stage in this part of the housing needs calculation involves converting the numbers in different household types into appropriate sizes and types of homes, and then comparing them with the available supply of appropriate homes. ECOTEC methodology used in Central 3 as described elsewhere has been used to make this conversion. The table below shows the results of this, and indicates for each dwelling type and each local authority whether there is a surplus, shortfall or balance between supply and demand. 21 ECOTEC

24 1 & 2 bed flats 2 bed houses 3 bed houses 4+ bed houses All dwellings Lichfield Solihull Tamworth Central 1 Gross annual need 2, ,093 Annual supply 3, ,149 Supply - need 264 (64) (130) (13) 57 Supply need 109% 82% 75% 94% 101% Shortfall/surplus BALANCED SHORTFALL SHORTFALL BALANCED BALANCED Gross annual need 1, ,374 Annual supply Supply - need (483) (63) (118) (29) (693) Supply need 52% 48% 32% 63% 50% Shortfall/surplus SHORTFALL SHORTFALL SHORTFALL SHORTFALL SHORTFALL Gross annual need 3, ,281 Annual supply ,026 Supply - need (2,423) (310) (420) (102) (3,256) Supply need 25% 15% 15% 41% 24% Shortfall/surplus SHORTFALL SHORTFALL SHORTFALL SHORTFALL SHORTFALL Gross annual need ,216 Annual supply Supply - need (869) (101) (135) (44) (1,149) Supply need 6% 2% 4% 2% 6% Shortfall/surplus SHORTFALL SHORTFALL SHORTFALL SHORTFALL SHORTFALL Gross annual need 8, , ,964 Annual supply 4, ,924 Supply - need (3,511) (537) (803) (188) (5,040) Supply need 57% 43% 39% 65% 54% Shortfall/surplus SHORTFALL SHORTFALL SHORTFALL SHORTFALL SHORTFALL However, there is no established standard concerning the matching of households to dwellings. It is widely acknowledged that the bedroom standard is inappropriate for this purpose because is a minimum standard rather than an optimum standard. It lies at the margin of acceptability and does not provide any reserve space and associated flexibility should there be changes. Since the completion of the Central 3 SHMA ECOTEC has developed an alternative matching table, one derived from an analysis of response data from the Survey of English Housing. This was based on all households in rental accommodation in the West Midlands who occupied their homes in line with the bedroom standard or bedroom standard +1 (i.e. had one additional bedroom in excess of the bedroom standard). This methodology is described more fully in Chapter 8, and had this alternative approach been used in the SHMAs, the revised need figures by bedroom size would be those in the table below: Table 2.11 Need and affordable supply by dwelling size Birmingham Table 2.12 Use of alternative matching table: Gross annual need by dwelling type/size required Dwelling type/size Birmingham Lichfield Solihull Tamworth Central 1 1 bed dwellings 1, ,471 2 bed flats 1, ,795 2 bed houses 2, ,631 3 bed houses 3, , bed houses ECOTEC

25 Meeting housing need The housing needs model carried out by Outside Consultants as part of the Central 1 Strategic Housing Market Assessment implies affordable housing targets of up to 100% across the different parts of the Housing Market Area. The assessment notes that this is neither appropriate nor desirable, concluding that there is clearly a need to look very carefully at the sites coming forward in the future and their suitability for mixed, sustainable developments as the Councils may need to seek a considerably higher proportion of affordable housing than has been the target in the past. The Outside analysis is similar to that of many SHMAs, where the resulting supply / demand relationship is such that it is not realistic that affordable housing programmes would be able to deliver the number of units required. To help local authorities prioritise, therefore, ECOTEC methodology calculates the amount of additional affordable housing to meet, respectively, 50% of annual need and 75% of annual need. Within these figures, prioritisation is given to supplying those homes for which there is proportionately least supply compared to demand. This means that generally figures emphasise development of larger homes, as there is much greater 'churn' of smaller homes. Table 2.13 Number of units required Number of Share units Share required 4+ bed houses , ,661 1 bed units & 2 bed flats 0% 0% 0% 0% 0% 2 bed houses 0% 1% 12% 0% 0% 3 bed houses 66% 71% 64% 42% 67% 4+ bed houses 34% 28% 24% 58% 33% Prioritising additional affordable housing supply to meet 50% of need Birmingham Lichfield Solihull Tamworth Central 1 1 bed units & 2 bed flats bed houses bed houses ,115 Prioritising additional affordable housing supply to meet 75% of need Birmingham Lichfield Solihull Tamworth Central 1 1 bed units & 2 bed flats bed houses bed houses 1, , bed houses , ,379 1 bed units & 2 bed flats 0% 0% 1% 0% 0% 2 bed houses 9% 10% 16% 9% 10% 3 bed houses 65% 67% 63% 58% 65% 4+ bed houses 26% 23% 21% 32% 25% Tenure split Due to the wide gap between social and private rents, the SHMA concluded that there is significant scope for intermediate tenures. Private sector rents range from 54% higher than social rents in Lichfield to 115% higher in Solihull. There is a limited role for shared ownership in the delivery of affordable housing in the Central 1 Housing Market Area. Shared ownership has a greater impact than discounted sale housing, although the SHMA concluded that it would still not be an affordable option for many of those households identified as being in housing need. It is only when shared 23 ECOTEC

26 equity homes are priced at 30% of market value that households on lower quartile income would be able to afford in Birmingham and Tamworth, and possibly Lichfield. There are no specific figures, so ECOTEC have calculated them as below. The final stage of the SHMA calculations is to give an indication of the split of tenures that are appropriate to meet both backlog and newly arising need. For the purpose of this study we analyse the appropriate percentages of market housing, intermediate affordable housing and affordable rented housing that should be planned for. We do not give unit numbers as clearly the appropriate amount will depend on (for affordable housing) the amount of grant and developer contribution that is available and viable; and for market housing, on developer appetite to build. The proportions below are based on the following assumptions, with a more detailed account of the methodology provided in Section 8: Market housing the percentage of market housing is based on the proportion of those newlyforming households that can afford to enter the open market, as calculated in the SHMA affordability test. In general, the private rented sector is cheaper than the open market sector, and a figure 10% below the Local Housing Allowance (which is the median for the area) equates in broad terms to the lower quartile; we have therefore used this as the entry level for newlyforming households, many of whose needs could be met at this point in the market. Intermediate housing the percentage is derived from the proportion of newly-forming households who can afford rents that are 20% below the median Local Housing Allowance but cannot afford market housing Affordable rented housing the percentage of those newly-forming households unable to afford intermediate housing We also note the breakdown within the affordable housing component of intermediate and affordable rented homes. Table 2.14 Tenure split based on affordability of newly arising households: Central 1 HMA Local Authority Open market Intermediate Social rented Intermediate share of Share Share Share affordable Birmingham 51% 7% 43% 13% Lichfield 68% 6% 26% 19% Solihull 53% 6% 40% 13% Tamworth 61% 5% 34% 13% Central 1 HMA 53% 6% 41% 14% 24 ECOTEC

27 3. Central 2 HMA 3.1 Key characteristics of the HMA Demographic drivers The Central 2 Housing Market Area covers the districts of Coventry, North Warwickshire, Nuneaton & Bedworth, and Rugby. Since 2001 all four districts in the Central 2 HMA have experienced population growth which has been at a rate of 1.5% in the sub-region overall. Both net in-migration and natural change have contributed to this, and the largest amount of growth has been in Rugby. Rugby gained population from some parts of the East Midlands and lost population to other parts. It gained significantly from Coventry, Warwick, Nuneaton & Bedworth, Stratford-on-Avon and Birmingham. Coventry has a much younger age profile than the other three districts with close to half the population under 34, suggesting greater demand for starter homes in the city. North Warwickshire, Nuneaton & Bedworth and Rugby all have greater proportions of the population in the year old age group. When compared to the regional and national average Coventry, North Warwickshire and Nuneaton & Bedworth have fewer people 60 years and over. Rugby stands out with a high proportion of residents in the older age group. Figure 3.1: Age breakdown of the population of the Central 2 HMA (2006) 40% 30% 20% 10% 0% 0-19 years years years years 80+ years Central 2 HMA 25.3% 20.4% 33.5% 16.5% 4.3% West Midlands 25.2% 18.8% 34.1% 17.4% 4.5% England 24.3% 19.8% 34.6% 16.8% 4.5% ONS 2006-based sub-national population projections Coventry has much larger ethnic minority communities than the other three districts. The SHMA notes a high degree of segregation of these communities, with concentrations running in a northeastwards direction across the city centre. As in other sub-regions there have been significant recent inflows of migrant workers from A8 accession states. The breakdown of households by household type in the Central 2 HMA differs very little from that of the region as a whole, and this is shown in the following graph. Single person households make 25 ECOTEC