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Housing and Planning in Northern Ireland Presentation to Conference of the Housing Studies Association, Belfast 9-10 th September 2004 Stanley McGreal Jim Berry House Price Trends 1985 - 1994 increase in nominal house price no significant increase in real terms

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slide1

Housing and Planning in Northern Ireland

Presentation to Conference of the Housing Studies Association, Belfast 9-10th September 2004

Stanley McGreal

Jim Berry

northern ireland private housing market long term trends

1985 - 1994

  • increasein nominal house price
  • no significant increase in real terms
  • N.I. low cost housing market
  • avoided market downturn of early 1990s

1995 - 2003:

  • rapid growth in nominal and real terms
  • key factors - growth in income levels

- declining unemployment

- interest rates

- political situation

- national UK trends

- spillover effects of Celtic tiger

Northern Ireland Private Housing Market Long Term Trends
slide9

Affordability Concerns

  • sustained and high levels of house price growth since the mid 1990s
  • house prices have risen more rapidly than incomes leading to an earnings gap
  • significant increase in house price to income ratio and convergence between NI and rest of UK
  • effects of higher house prices ameliorated by low interest rates and competitive mortgage market
  • concerns relate to those on the margins of home-ownership and the single-income first-time buyer
  • regulatory role of the planning system in influencing supply-side
  • high land value encourages development to be focused away

from the first-time buyer to the middle/upper market sectors

slide10

Affordability in the Northern Ireland Housing Market: 2001 Report

  • the nature and extent of affordability problems in Northern Ireland bore little relation to some other parts of the UK
  • affordability not seen as major problem affecting the market
  • recognised that first-buyers faced increasing difficulties
  • affordability issues were localised on particular areas
  • not an immediate need for affordability to become a major driver of housing strategies in NI
  • recommended that affordability issues be monitored with the flexibility to adjust policies
slide11

Comparative Experience in England and Republic of Ireland

  • problem of developing robust and objective measures
  • reservations regarding methodology used
  • concerns about data and adequacy for the purpose
  • analysis often not sufficiently robust to support detailed targets
  • local authorities and developers often critical of housing needs surveys, the assumptions and approaches to assess the need for affordable housing
slide12

Lessons from Experience

  • should not set out to develop an overly-sophisticated approach
  • method should be governed by data availability, robustness, simplicity of application and repeatability
  • should focus upon affordability change over time
  • key factors identified as being the inter-play between interest rate, incomes and house prices
slide13

Building a Model for Northern Ireland

  • faced with same difficulties in relation to data in relation to income and house price data
  • for income data – several sources but structured on different basis and restricted coverage for the purposes of this model
      • Family Expenditure Survey
      • Continuous Household Survey
      • New Earnings Survey
      • Labour Force Survey
      • House Condition Survey
  • for the model developed used survey data from the House Condition Survey
slide14

Building a Model for Northern Ireland

  • for house price data – several sources but structured on different basis and restricted coverage for the purposes of this model
      • Halifax
      • Nationwide
      • Council of Mortgage Lenders
      • DSD
      • NHBC
      • Northern Ireland Quarterly House Price Index
  • for the model developed used survey data from the Northern Ireland Quarterly House Price Index
slide15

Characteristics of the Model for Northern Ireland

  • developed on a district council basis – spatial patterns
  • developed for different years - change through time
  • gross household income – median income
  • utilise the first quartile of house prices as an affordability threshold
  • use an annuity formula to determine size of loan and from this an affordable price threshold
slide17

Inputs into the Model

  • mortgage rate
  • term of mortgage – assumed 25 years
  • maximum percentage of gross household income that may be considered affordable – initially set at 30%
  • loan to value ratio - set at 95%
slide19

Affordability Model : Belfast

  • 2001

median income £12,500

affordable price £52,288

price at q1 £61,950

affordability gap -£9,662

percentage affordable 15%

  • 2003

median income £14,750

affordable price £61,700

price at q1 £69,950

affordability gap -£8,250

percentage affordable 16%

slide20

Affordability Model : North Down

  • 2001

median income £17,500

affordable price £73,203

price at q1 £71,000

affordability gap +£2,203

percentage affordable 28%

  • 2003

median income £20,650

affordable price £86,380

price at q1 £80,000

affordability gap +£6,380

percentage affordable 32%

slide21

Affordability Model :Castlereagh

  • 2001

median income £17,500

affordable price £73,203

price at q1 £77,000

affordability gap -£3,797

percentage affordable 23%

  • 2003

median income £20,650

affordable price £86,380

price at q1 £95,000

affordability gap -£8,620

percentage affordable 17%

slide22

Affordability Model

  • produces a working model
  • flexible regarding input sources and changes to inputs
  • sensitivity of variables can be tested
  • focus upon change over time
  • the analysis indicates that affordability issues are variable by market area
slide23

Barker Review 2004

Review of Housing Supply: Delivering Stability: Securing our Future Housing Needs (March 2004)

To achieve:

  • improvements in housing affordability in the market sector in the UK
  • a more stable housing market
  • location of housing supply which supports patterns of economic development
  • an adequate supply of publicly-funded housing for those who need it
slide24

Barker Review 2004

Planning for housing development

  • Increasing supply side
  • Making better use of information about prices and preferences in planning decision making
  • Facilitating process through greater speed and certainty
  • Allocating more land for development based on market affordability targets, strategic growth areas, transport corridors
slide25

Barker Review 2004

Delivering housing development

  • Right package of incentives to facilitate supply
  • Reforms to local government finance
  • Sustainability of physical and social infrastructure
  • Land assembly, land servicing and infrastructure provision
  • Coordination between planning & infrastructure providers
  • More strategic view of area based special purpose vehicles
  • Use of fiscal incentives
slide26

RDS:Meeting Housing Need

Core principles underpinning housing policy in RDS 2025

  • widening opportunity and choice
  • Improving the supply and quality of housing
  • Promoting sustainable development
slide27

RDS:Meeting Housing Need

Balanced and integrated development

  • Integrating housing with economic development, services, transport, and the local environment
  • Achieving a balanced spread of housing across the region and a high degree of integration with the RSTN of road and rail corridors
  • Promoting a greater sense of community with a focus on place, the value of the individual and high quality living environments
slide28

RDS:Meeting Housing Need

Key Housing Themes in RDS

  • Managing housing growth and distribution
  • Supporting urban renaissance
  • Achieving balanced communities
slide29

Managing Housing Growth and Distribution

  • Providing for a balanced supply of land throughout the region based on a robust and flexible approach to meeting future housing need
  • Setting housing growth indicators to guide the distribution of housing in the Region to 2015
  • Allocating housing growth to the main and small towns within context of the SDS by defining housing allocations in development plan

Plan, Monitor & Manage mechanism

Periodic releases of development land

Over-zoning of 10% as contingency

slide30

RDS Projections 2015

  • Population Growth of 105,000
  • Need for 160,000 additional dwellings (250,000 by 2025)
  • Over 60% of new households will be 1-2 persons
  • Economic growth will necessitate 100,000 new jobs
slide33

Supporting Urban Renaissance

  • Promoting 60% of new housing on brownfield sites
  • Encouraging compact urban form
  • Increasing density of urban housing appropriate in scale and design
  • Sequential approach
  • Quality Residential Environments (PPS 7)
slide34

Achieving Balanced Communities

  • Developing community cohesion
  • Providing housing choice
  • Promoting home ownership and affordable housing
  • Providing social housing to meet identifiable needs
  • Requiring an appropriate provision in larger developments
  • Mix of housing tenures and house types
slide35

Planning Policy

DRD is preparing

  • PPS 12 Housing in Settlements (Autumn 2004)
  • PPS 14 Development in the Countryside (Issues Paper)
slide36

PPS 12 : Housing in Settlements (Draft)

Housing Land Requirements

  • Housing Growth Indicators
  • Urban Capacity Studies
  • Sequential Approach
  • Plan, Monitor and Manage
  • Windfall Sites
  • Local CharacterAssessment
slide38

Regional Housing Need Review: Timetable

As part of the first 5 year review, DRD in conjunction with NISRA is reviewing the regional figures

  • Ministerial Statement in the Autumn 2004
  • Period of consultation early 2005
slide39

Regional Housing Need Review: Key Issues

  • Ensuring an adequate supply of land
  • Meeting the full range of housing need
  • Continuing pressure for housing in the open countryside
  • Meeting the needs of rural communities
  • Applying a one-fit-all v flexible approach to meeting uplift
  • Differing needs at sub-regional level
  • Balanced communities & mixed use development
  • Buy-in by government departments