Housing and Planning in Northern Ireland Presentation to Conference of the Housing Studies Association, Belfast 9-10 th

1. Housing and Planning in Northern Ireland Presentation to Conference of the Housing Studies Association, Belfast 9-10th September 2004 Stanley McGreal Jim Berry

2. House Price Trends

3. 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

4. Average House Price by Type Northern Ireland

5. Average House PriceBelfast City

6. House Price Contours Belfast Metropolitan Area

7. NI Housing Completions 1987-2003

8. Dwellings Completed per 1000 Population

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

17. 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%

18. Affordability by District Council Area: 2001

19. 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%

20. 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%

21. 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%

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. RDS:Meeting Housing Need Key Housing Themes in RDS • Managing housing growth and distribution • Supporting urban renaissance • Achieving balanced communities

29. 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

30. 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

32. Housing Growth Indicators

33. 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)

34. 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

35. Planning Policy DRD is preparing • PPS 12 Housing in Settlements (Autumn 2004) • PPS 14 Development in the Countryside (Issues Paper)

36. 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

37. Housing in the Countryside

38. 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

39. 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