The Savills Housing Sector Survey

The Savills Housing Sector Survey
 
Fresh foundations

27 June 2017, by Savills Research

Every year, more than 70,000 new households are excluded from the housing market. Only increased delivery across a range of tenures can meet need and improve affordability

 

The Housing White Paper of February 2017 marked a sea change in housing policy, conceding that private housebuilding for sale would not deliver enough homes to meet need and improve affordability. A series of measures was proposed to diversify the housebuilding industry, such as encouraging housing associations to do more, and even urging local authorities to revisit their role as major developers.

Doing more with less

Affordable housing delivery has averaged more than 45,000 homes per year for more than two decades. Housing associations deliver a lot of these homes, but are well placed for an even bigger role. Restrictions on grant are a challenge, but associations have maintained delivery levels through the reduced funding period, switching from social rent to supply mostly affordable rent. Now, there will be most support for shared ownership, so we expect associations to respond to this.

Affordable delivery and grant peaked around the global financial crisis in 2008-09, supporting the wider housebuilding industry. Continuing to deliver affordable homes with less grant funding requires cross-subsidy from profit-making developments.

FIGURE 1

Tenure shift – The reduction in grant has had a large impact on the tenure of affordable homes being delivered, with affordable rent displacing much of what was social rent

 
Figure 1

Source: Savills Research using DCLG and HCA data | Note *Affordable rent includes other discounted rental tenures

National policy, local issues

The role of the sector is dependent on local housing market conditions. Households excluded from the market are different across the country. In parts of London, households with an income of £30,000 might struggle to access the private rental market. The same household in Sunderland may be able to buy a family home.

Different challenges require different responses and tenure mixes. But, across the board, delivering more homes affordable to those on the lowest incomes requires cross-subsidy from other profit-making ventures. That necessitates better understanding of what makes the wider housing and development market tick.

Fundamentally, it means change. Change in what is delivered (Meeting future needs). Change in how the sector finances its expansion (Show me the money – Fig 6). And change in how it goes about securing land for development (Investment in strategic land – Fig 7).

FIGURE 2

Local issues – Excluded households vary across the country and require different responses and tenure mixes. The map shows the average income of households unable to access market housing

 
Figure 2

Source: The Future of Sub-Market Housing, Savills Research, autumn 2015

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