Housing affordability data shows shortcomings of using the standard method for housing delivery, says Peter Brampton, senior planner for Savills’ central planning team, which operates across the Thames Valley.
The latest housing affordability data, released in March, has highlighted the limited effectiveness of the standard method for calculating local housing need in ensuring enough new homes are built.
According to the 2024 standard method, we need to build 291,000 homes each year in England – a fall of 1.8 per cent from the 296,000 new homes figure calculated in 2023. This has been driven by strong wage growth across the country of 5.5 per cent, outpacing the rate of house price growth, which averaged 4.3 per cent – suggesting that homes have become more affordable, and therefore producing a lower housing need figure for all regions.
The most significant falls have been in the South East and East of England, where housing need was calculated to fall by over 2.5 per cent over the course of the year – a combined loss of 2,000 homes. However, affordability remains constrained in these regions, with a ratio of house prices to earnings of 9.65 in the East of England and 10.39 in the South East.
More locally, the ratio is 11.00 in South Oxfordshire, 11.71 in Oxford, 11.6 in Buckinghamshire, 9.65 in Slough, and 14.21 in Windsor and Maidenhead. Given this, the idea that the standard method accurately reflects the reality of housing need in our region is highly debatable. Not least because nationally, average monthly mortgage payments rose from 20.4 per cent of income at the end of 2021 to 30.6 per cent in the last three months of 2023.
The standard method calculation fails to address the historic shortfall in delivery against housing need. In the three years to March 2023, there was a national shortfall of approximately 22 per cent against the calculated housing need for that period, which is not accounted for within the standard method.
Furthermore, the standard method continues to use 2014 based data for household projections, another key input. The 2021 census shows the significant population growth driven by net migration that again is not reflected in the 2024 methodology.
Local planning authorities in this region risk compounding the situation. For example, the recent Preferred Options version of the emerging Joint Plan 2041 for South Oxfordshire and the Vale of White Horse proposes to meet only the standard method calculation using the 2022 affordability ratio. But national planning policy is clear; that the standard method is an advisory starting point for establishing housing requirement for the area.
In contrast, Oxford City commissioned a new Housing Needs Assessment, jointly with Cherwell District Council, to inform its now submitted Local Plan 2040. This does take account of the latest demographic data, but also butts against the known capacity constraints in the city, resulting in increased unmet need, for which the solution remains unclear.
It remains to be seen how the next Local Plans in Buckinghamshire and Windsor and Maidenhead will choose to engage with the particularly acute affordability issues they face.
But it appears relying on the current standard method calculation alone will not be sufficient.
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