Housing Market Summary
Housing Market Summary North West Region
Introduction This issue will focus on the following areas: • • • •
Housing Stock House building House Prices and Affordability Population and Household Composition
Housing Stock As this is the first quarterly report of 2008, it would be useful to first analyse the region’s housing stock by looking at the data provided in the HSSA published by CLG. According to this data, there are 3,084,320 properties in the region, up from 3,063,777 at this point last year – an increase of 20,543 dwellings. Figure 1 shows the tenure breakdown within the five sub-regions and it can be seen that the greatest supply of social accommodation can be found in Greater Manchester (23%) and Merseyside (22.3%) while the smallest is in Lancashire (12.8%). Meanwhile, higher than regional average (81%) private dwellings can be found in Cheshire (84.8%), Cumbria (86.1%) and Lancashire (87%).
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Figure 1: Tenure Breakdown by Sub-Region
LA 100.0%
RSL Other Public
90.0%
Private sector
80.0% 70.0%
%
60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Cheshire
Cumbria
Greater Manchester
Lancashire
Merseyside
Sub-region
Not surprising then, given the sub-regional tenure make-up, that the greatest proportionate supply of private sector housing can be found in Wyre (92.7%) and Ribble Valley (92.5%) in Lancashire. With over one-third of Manchester’s stock being in the social sector (34.1%), the City has the largest proportion of social accommodation in the region. House Building In its attempts to tackle the affordability problem, Government is putting much ‘stock’ in increasing the supply of housing. The recent Green Paper pledges 70,000 affordable homes a year by 2010-11, 45,000 of which will be social housing. Housing supply in the region does continue to grow. Although in the final quarter of 2007, 5,155 dwellings were completed (down from 5,527 on the corresponding quarter of 2006), this brings to an end a year in which 19,124 homes were built, up from 18,563 in 2006. Of those built in the final quarter, the vast majority (97.5%) were earmarked for private enterprise while 2.5% were built by Registered Social Landlords and a further 0.1% by local authorities. There are signs from this data however, that confidence in the market is falling with annual building starts being at their lowest since 1996. In the final quarter of last year, building starts stood at 3,567, which itself is down on 5,045 on the final quarter of 2006.
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House Prices and Affordability Data released by Valuation Office Agency shows that over half of dwellings in the North West (58%) fall into Council Tax Band C or below (valued below £68,000) compared to 44% for England as a whole. This high North West figure can be explained largely by the stock in the sub-regions of Greater Manchester (47.6% in Band A) and Merseyside (48.4% in Band A), where proportions of Band A dwellings are well above the national average of 2.9%). While the regional average of dwellings valued within Band G (£160,001 to £320,000) stands at 1.9%, 4.8% of dwellings in Cheshire are so. It should be pointed out that the data above is based on the total stock in the region rather than the house price data that is based solely on the private sector. Data provided by Hometrack is based on their Automated Valuation Model and shows that the overall average house price in the region for the first quarter of this year stood at £164,200 compared to a national average of £213,367. This figure is up from £156,700 in the corresponding quarter of 2007 – an increase of 4.6%. Recent research carried out by Shelter through its Roof Affordability Index highlighted the problems faced by first time-buyers in getting onto the property ladder. In the final quarter of 2007, first-time buyers paid of average, £126,439 for their first home in the North West. This is down from £126,505 in the previous quarter (CLG). Figure 2 below shows the average house prices by dwelling type for the five sub-regions. It shows that the sub-regional breakdown varies somewhat and that vendors therein appear to be able to demand varying prices for similar dwelling types. For instance, prices in Cheshire for all property types are most expensive. Indeed the average price for a flat in the Cheshire (£135,129) outstrips those for terraced accommodation in the other sub-regions. Meanwhile, it is noticeable that in Greater Manchester and Merseyside, average flatted property prices can command a higher price than can terraced properties in the same sub-regions.
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Figure 2: Property prices by sub-region 400,000
Detached Semi-Detached
350,000
Terraced Flat
300,000
£
250,000 200,000 150,000 100,000 50,000 0 Cheshire
Cumbria
Greater Manchester Sub-Region
Lancashire
Merseyside
(Source: Hometrack)
Sales Volumes Sales volumes turnover in 2007 stood at 147,245 (5.9% of the private stock in the region). This represents a decrease of 9.6% on the previous year. Greater Manchester saw the greatest number of sales with 58,800 (6.2% of stock), while in Lancashire there were 32,200 (6.1%), 25,700 in Merseyside (5.3%), 17,200 in Cheshire (5.6%) and 11,300 in Cumbria (5.6%). However, in terms of sales as a proportion of private stock in the sub-regions, there is little difference between them – all being around the 5.3%-6.2% mark. Affordability Despite the concerns for the economy generally and the downturn in the housing market in particular, there are still concerns over affordability in the region, prompting the Government to tackle the issue by offering further incentives to first-time buyers and key workers in the recent budget. The Hometrack website compares lower quartile house prices to lower quartile incomes to produce an affordability ratio that can be useful in pinpointing where issues of affordability are arising. Although the region has one of the lowest affordability ratios (6.6) compared with the English figure (8.1) and is the second most affordable region to buy a home, this conceals more worrying patterns in the sub-regions and local authority areas. Both Cumbria (7.2) and Cheshire (7.2) have affordability ratios above the regional average. There are a number of authorities where affordability ratios
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are above the national average but in South Lakeland (10.1) and Eden (9.5) ratios are well above this figure. As Map 1 below shows, local authorities in the west and north of Cumbria and east of Lancashire, affordability ratios are lower than the regional average. Map 1: Affordability Ratio by Authority Area
Below 6 6 – 6.5 6.5 – 7.0 7.0 – 7.5 7.5 – 8.0 Above 8
© Copyright Ordnance Survey
Hometrack provide analysis of the affordability of buying different property types for different incomes. Figure 3 below shows the number of households in different household income bands in the area (bars) compared to the minimum price for different property types in the same area (horizontal lines). The diagonal lines rising from left to right show the value of property that can be afforded at different income multiples by a first time buyer and former owneroccupier. The affordability calculations are based on a multiple of the average household income adjusted by the average loan to value for the different types of buyer. The house price data is based on data from the Hometrack Automated Valuation Model and the incomes data is supplied by CACI.
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Figure 3: North West Affordability (3 times income)
Population and Household Composition Population projections show a continued increasing population in the region. ONS figures have the regional population at 6,851,700 in 2008, rising to 6,914,200 in 2013 and 6,987,600 in 2018 (a 3.7% increase in the next decade). Populations in Greater Manchester and Lancashire are projected to grow by 0.2% while in Merseyside, a fall of 0.5% is projected. Married or co-habiting people make up 43.8% of North Western households. The next most popular household is the single person (30.9%). Lone parents make up 11.1% and full-time students, 0.3%. Single person households are most prevalent in Merseyside (33.5%) as are lone parent households (14.5%). Greater Manchester’s proportion of lone parent families (11.7%) is also above the regional average. Endnote The next report will concentrate on the second quarter of 2008 and will be available to all NHC members. If you have any questions or queries regarding this document, please contact Barry Turnbull at Northern Housing Consortium on 0191 5661030 or at [email protected]. Alternatively visit our website at www.northern-consortium.org.uk.
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Introduction This issue will focus on the following areas: • • • •
Housing Stock House building House Prices and Affordability Population and Household Composition
Housing Stock As this is the first quarterly report of 2008, it would be useful to first analyse the region’s housing stock by looking at the data provided in the HSSA published by CLG. According to this data, there are 3,084,320 properties in the region, up from 3,063,777 at this point last year – an increase of 20,543 dwellings. Figure 1 shows the tenure breakdown within the five sub-regions and it can be seen that the greatest supply of social accommodation can be found in Greater Manchester (23%) and Merseyside (22.3%) while the smallest is in Lancashire (12.8%). Meanwhile, higher than regional average (81%) private dwellings can be found in Cheshire (84.8%), Cumbria (86.1%) and Lancashire (87%).
1
Figure 1: Tenure Breakdown by Sub-Region
LA 100.0%
RSL Other Public
90.0%
Private sector
80.0% 70.0%
%
60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Cheshire
Cumbria
Greater Manchester
Lancashire
Merseyside
Sub-region
Not surprising then, given the sub-regional tenure make-up, that the greatest proportionate supply of private sector housing can be found in Wyre (92.7%) and Ribble Valley (92.5%) in Lancashire. With over one-third of Manchester’s stock being in the social sector (34.1%), the City has the largest proportion of social accommodation in the region. House Building In its attempts to tackle the affordability problem, Government is putting much ‘stock’ in increasing the supply of housing. The recent Green Paper pledges 70,000 affordable homes a year by 2010-11, 45,000 of which will be social housing. Housing supply in the region does continue to grow. Although in the final quarter of 2007, 5,155 dwellings were completed (down from 5,527 on the corresponding quarter of 2006), this brings to an end a year in which 19,124 homes were built, up from 18,563 in 2006. Of those built in the final quarter, the vast majority (97.5%) were earmarked for private enterprise while 2.5% were built by Registered Social Landlords and a further 0.1% by local authorities. There are signs from this data however, that confidence in the market is falling with annual building starts being at their lowest since 1996. In the final quarter of last year, building starts stood at 3,567, which itself is down on 5,045 on the final quarter of 2006.
2
House Prices and Affordability Data released by Valuation Office Agency shows that over half of dwellings in the North West (58%) fall into Council Tax Band C or below (valued below £68,000) compared to 44% for England as a whole. This high North West figure can be explained largely by the stock in the sub-regions of Greater Manchester (47.6% in Band A) and Merseyside (48.4% in Band A), where proportions of Band A dwellings are well above the national average of 2.9%). While the regional average of dwellings valued within Band G (£160,001 to £320,000) stands at 1.9%, 4.8% of dwellings in Cheshire are so. It should be pointed out that the data above is based on the total stock in the region rather than the house price data that is based solely on the private sector. Data provided by Hometrack is based on their Automated Valuation Model and shows that the overall average house price in the region for the first quarter of this year stood at £164,200 compared to a national average of £213,367. This figure is up from £156,700 in the corresponding quarter of 2007 – an increase of 4.6%. Recent research carried out by Shelter through its Roof Affordability Index highlighted the problems faced by first time-buyers in getting onto the property ladder. In the final quarter of 2007, first-time buyers paid of average, £126,439 for their first home in the North West. This is down from £126,505 in the previous quarter (CLG). Figure 2 below shows the average house prices by dwelling type for the five sub-regions. It shows that the sub-regional breakdown varies somewhat and that vendors therein appear to be able to demand varying prices for similar dwelling types. For instance, prices in Cheshire for all property types are most expensive. Indeed the average price for a flat in the Cheshire (£135,129) outstrips those for terraced accommodation in the other sub-regions. Meanwhile, it is noticeable that in Greater Manchester and Merseyside, average flatted property prices can command a higher price than can terraced properties in the same sub-regions.
3
Figure 2: Property prices by sub-region 400,000
Detached Semi-Detached
350,000
Terraced Flat
300,000
£
250,000 200,000 150,000 100,000 50,000 0 Cheshire
Cumbria
Greater Manchester Sub-Region
Lancashire
Merseyside
(Source: Hometrack)
Sales Volumes Sales volumes turnover in 2007 stood at 147,245 (5.9% of the private stock in the region). This represents a decrease of 9.6% on the previous year. Greater Manchester saw the greatest number of sales with 58,800 (6.2% of stock), while in Lancashire there were 32,200 (6.1%), 25,700 in Merseyside (5.3%), 17,200 in Cheshire (5.6%) and 11,300 in Cumbria (5.6%). However, in terms of sales as a proportion of private stock in the sub-regions, there is little difference between them – all being around the 5.3%-6.2% mark. Affordability Despite the concerns for the economy generally and the downturn in the housing market in particular, there are still concerns over affordability in the region, prompting the Government to tackle the issue by offering further incentives to first-time buyers and key workers in the recent budget. The Hometrack website compares lower quartile house prices to lower quartile incomes to produce an affordability ratio that can be useful in pinpointing where issues of affordability are arising. Although the region has one of the lowest affordability ratios (6.6) compared with the English figure (8.1) and is the second most affordable region to buy a home, this conceals more worrying patterns in the sub-regions and local authority areas. Both Cumbria (7.2) and Cheshire (7.2) have affordability ratios above the regional average. There are a number of authorities where affordability ratios
4
are above the national average but in South Lakeland (10.1) and Eden (9.5) ratios are well above this figure. As Map 1 below shows, local authorities in the west and north of Cumbria and east of Lancashire, affordability ratios are lower than the regional average. Map 1: Affordability Ratio by Authority Area
Below 6 6 – 6.5 6.5 – 7.0 7.0 – 7.5 7.5 – 8.0 Above 8
© Copyright Ordnance Survey
Hometrack provide analysis of the affordability of buying different property types for different incomes. Figure 3 below shows the number of households in different household income bands in the area (bars) compared to the minimum price for different property types in the same area (horizontal lines). The diagonal lines rising from left to right show the value of property that can be afforded at different income multiples by a first time buyer and former owneroccupier. The affordability calculations are based on a multiple of the average household income adjusted by the average loan to value for the different types of buyer. The house price data is based on data from the Hometrack Automated Valuation Model and the incomes data is supplied by CACI.
5
Figure 3: North West Affordability (3 times income)
Population and Household Composition Population projections show a continued increasing population in the region. ONS figures have the regional population at 6,851,700 in 2008, rising to 6,914,200 in 2013 and 6,987,600 in 2018 (a 3.7% increase in the next decade). Populations in Greater Manchester and Lancashire are projected to grow by 0.2% while in Merseyside, a fall of 0.5% is projected. Married or co-habiting people make up 43.8% of North Western households. The next most popular household is the single person (30.9%). Lone parents make up 11.1% and full-time students, 0.3%. Single person households are most prevalent in Merseyside (33.5%) as are lone parent households (14.5%). Greater Manchester’s proportion of lone parent families (11.7%) is also above the regional average. Endnote The next report will concentrate on the second quarter of 2008 and will be available to all NHC members. If you have any questions or queries regarding this document, please contact Barry Turnbull at Northern Housing Consortium on 0191 5661030 or at [email protected]. Alternatively visit our website at www.northern-consortium.org.uk.
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