Spotlight: Reading

Reading
 
Meeting growing demand

28 September 2017, by Savills Research

Despite its strong tech economy, enviable location and transport links, Reading is constrained by its housing stock. We highlight untapped potential both in town and beyond

 

To accommodate its growing housing need and emerge as a true city, Reading requires more homes of all tenures. These homes should meet a range of demands, including private rent, affordable, and open market sale.

House prices, affordability, and demand for Help to Buy, all point to the need for more mixed-tenure developments. The delivery models of housing associations such as L&Q and Places for People aim to meet a range of housing need, from build to rent and shared ownership through to open market sale and affordable homes, and Reading needs to see more of this type of housing delivery.

Private rent on the rise

With strong economic growth and good transport links to London, there is high demand to support this tenure for rented housing in Reading.

Almost one-third of households rent privately in Reading, which is significantly above the national average and more in line with central London, which points to the need for more rental supply. Rents have been growing despite an increase in stock following the rise in stamp duty in 2016. The success of the office to residential conversion market also indicates demand for urban living and rented housing.

Driven by international occupiers and the push into the tech economy, we believe there is untapped demand from ‘urbanite techies’ for purpose-built rented housing. As yet, Reading has not seen the delivery of any new build-to-rent schemes, while there is a strong market for this type of product in the town centre. This group is likely to be young and prefer to rent.

Build to rent is not just an urban phenomenon. We have seen many successful family housing models which use a build-to-rent delivery and funding approach. Both Sigma and Mill have acquired housebuilder stock on mixed-tenure developments and deliver family housing stock for the rental market.

Housing associations are also delivering rented stock on large housing developments. This build-to-rent solution will be focused around the delivery of professionally managed, good-quality family housing that is less amenity driven and in locations where families want to live.

Demand for Help to Buy

As well as homes for rent, Reading is in desperate need of homes for open market sale. With the average house costing nine times annual earnings (up from six times in 2013), it has become less affordable for local people.

First-time buyers have been supported by Help to Buy. They make up 93% of those using the scheme in Reading since it was introduced. In the town centre, new supply has sold to investors leaving little stock for first-time buyers. Additional supply is needed to meet the local owner-occupier market.

FIGURE 5

Beyond the boundaries There is the potential to deliver more than 20,000 homes in and around Reading, but it means working collaboratively with neighbouring authorities

 
Figure 5

Source: Savills Research


Locating new land for new homes

To grow into a city, Reading needs more space – not just urban sites, but also to expand outwards. However, the district of Reading is constrained by flooding risk and areas of outstanding natural beauty (AONBs). If it is to deliver significantly more homes, Reading needs to look beyond its boundaries. This means working with neighbouring authorities.

There are two key areas for the development of new homes: Whitley and South of the M4 area (which includes Shinfield Meadows). Between them, these areas could provide 5,000 more homes in the area. A further three smaller sites; Emmer Green & Playhatch, Theale and Calcot and Winnersh have sites for 1,000 to the north, west and east of the town.

Grazeley is a proposed garden settlement which could accommodate up to 15,000 homes to the south of Reading. It is at a very early planning stage and, if progressed, is a potential option for meeting the housing needs of the West of Berkshire Planning authorities that comprise Wokingham Borough, West Berkshire and Reading Borough Councils.

Most of these areas cross into neighbouring districts. Although West Berkshire, Wokingham and Reading have enough land in their five year land supply, South Oxfordshire does not. This district can work with Reading to provide homes to the north of the town subject to significant infrastructure improvements.

To unlock large-scale development north of Reading, new or improved transport links will be needed. Areas to the south can access the M4, but the congestion on the A34 into Reading will need to be resolved to accommodate the new growth.

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Jacqui Daly

Jacqui Daly

Director
Residential Research

Savills Margaret Street

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Simon Preece

Simon Preece

Research Analyst
Commercial Research

Savills Margaret Street

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