Demographic trends and housing

need in Northern

IrelandHousing Studies Association Conference

April 2015Chris Paris & Joe Frey

Introduction• Research Study commissioned by the Northern

Ireland Housing Executive – Regional Housing Body• Landlord with almost 90,000 properties – but is

statutorily required to undertake a number of strategic roles as well – in particular research on housing conditions and housing need

• NIHE currently undergoing a major transformation – the “the Social Housing Reform Programme” – in the context of an expected sharp increase in “austerity” – so far a failure to agree on the implementation of welfare reform and substantial reductions in funding for capital improvements

Demographic trends and housing

1981-2011

• This presentation derives from a larger research study undertaken by a team led by RSM McClure o Demographic trends and future housing need in Northern Ireland

• The study combined a range of quantitative and qualitative methods: o Analysis of census & other data o A review of the literature on policy developments across the UKo Extensive consultation with housing experts in NIo Assessment of the need for social housing 2011-2021

• Similar earlier studies covered the inter-censal periods 1981-1991 and 1991-2001

A changing demographic environmentContinuity and discontinuity with previous periods

• Some trends continued: – Overall population continued to grow (by 126,000 (7.5%) to 1.8m in

2011). Mainly due to natural increase and net migration gain 2003-2007;

– Falling % of married couples with dependent children falling (24% in 2001to 20%); from 1/3 to 1/5 in 20 years.

– Falling proportion of children <16 = 26% in 1991, 24% in 2001 and >21% in 2011.

– Increasing % of all children in lone parent households (4.6% in 2001 to 5.1% in 2011).

– Population continued to age overall (over 65s increasing from 13% in 1991 to 14.5% in 2011).

– The number of over-65s is projected to exceed the number of under-16s around the mid-2020s, despite recent changes in fertility patterns.

– Growth of 80+ category – 42,000 (2.7%) in 1991; 54,000 (3.2%) in 2001 and 68,000 (3.7%) in 2011.

– Significant sub-regional demographic variations implying continued need for top-down analysis and complemented by bottom up perspective.

Children aged under 16 and adults aged 65 and over, actual and projected, 1981-2037

A changing demographic environment• Some trends slowed:

– Average household size fell (2.65 to 2.5) but at a slower rate than before.

– Number of households grew by 12% to 703,300 but rate of growth slowed relative to population.

– Single person households remained biggest household type (27% in 2001, 28% in 2011).

– Slower growth in proportion of lone parent households w/dependent children - 9% in 2011, 8% in 2001.

– Continuing fall in all households w/dependent children (2001 – 37%; 2011 – 34%).

A changing demographic environment

(1)• And other trends changed:

– From fall to growth of households with non-dependent children. Trend for adult children to leave family home reversed NI has highest proportion in UK of young adults living with parents

A changing demographic environment

(2)– Slight reversal of trend of falling birth rates after 2008, implying

natural increase will be sustained during 2011-2021

– A new dynamic of migration with a shift from overall loss to gain. 38,000 mainly from recently joined EU countries to 2008. This

has returned to net out-migration since 2009 Migration patterns concentrated in distinct geographical areas

(e.g. Dungannon)

A changing demographic environment

(3)– More in households, fewer in communal establishments

Decreased by nearly 2,000 (or -7.4%), despite an ageing population, unlike the previous period (+1,000). Overall fall reflects four different trends

Large out-migration of defense personnel (-3,000 overall). Fewer residents in Health and Social Care Trust (HSCT)

medical and care establishments (-18%). Increase in non-HSCT establishments (15%). Increase in educational establishments (15%).

Implications for housing

• Demographic change and housing = a “two-way street”: – Demographic changes drive changing housing needs, AND– Changes in the housing system affect demographic change

• The falling AHS and growth of single living imply a need for more smaller homes, especially in the social sector.

• But housing shortages and house price inflation can delay household formation.

• Other factors also affect demography-housing equations:– Household income & wealth affect housing and demographic

choices (rent/buy, have children or not)– Public policies can affect patterns of dwelling availability and

price: e.g. policies relating to the housing needs of older people, welfare reform, education funding, HMO policy and implementation

Turbulent housing market context

• 2001-2011 = boom and bust in housing market– Rapid growth in house prices and building to 2007– Falling prices and construction levels since 2007

• Big changes in the mix of households by tenure 2001-2011– Private renting up from 8% to 16.5% of households– HE tenants down from 18% to 11% of households– Small growth in housing associations, especially compared to GB where

there have been major stock transfers– Growing % outright home owners: 29% < 32%– Falling % home purchasers 40% > 35%

• The sale of HE dwellings appears to have played an important role in boosting the private rented sector– But this may or may not continue– Potential impacts of welfare reform

Need for continuing growth in

supply• The increasing population & number of

households imply a need for growth in housing supply.

• But the rate of decline in average household size may continue or that trend may even reverse.

• And uncertainty about scale of change, especially given volatile migration patterns.

• Considerable market & policy uncertainties remain o Continuing uncertainty in the local housing market and

new housing construction likely only to pick up slowly• An estimate of the need for social housing 2011-21 was

made using the Net Stock Model (NSM).

Projected Households(000)

Extra demand 2011-2021New householdsConcealed householdsTemporary accommodationTotal extra demand

79.25.01.4

85.6

Extra supply 2011-2021New private outputLess net demolitions, conversions and closuresLess 5% second homesLess 5% vacancy in private housingTotal extra supply

83.3(3.0)(4.1)(4.1)72.1

Social housing neededDeficitPlus 2% vacancy in new socialTotal neededTotal rounded and allowance for other factors

13.50.3

13.815.0

Total per annum 1.5

Net Stock Model for Northern Ireland 2011-2021

Backlog and Waiting List

• The revised Net Stock Model indicates that a minimum of 1500 new social dwellings will be required each year in order to simply meet the ongoing demands due to growth in the number of households and the need to replace existing stock in Northern Ireland.

• The report also highlights that the waiting list backlog of 2001-2011 is now subsumed in the waiting list (i.e. within the 21,500 in the number of housing stress registered on the Waiting List in 2011).

• In addition to the 1500 units under NSM for ongoing household growth, an additional 500 are needed to address the backlog subsumed in the waiting list and the expected low rates of private sector output over the next 3 years.

• It is therefore appropriate to continue to have a needs-based annual target of 2,000 new social dwellings for the next five year period.

Using the Net Stock Model• The NSM has informed the NI social housing programme

for 20 years and has the merits of simplicity, clarity and consistency.

• It considers the need for additional social housing construction on the basis of a range of factors including:o The projected growth in households and expected private

housing constructiono Other variables, such as demolitions, vacancy rates and

concealed households.• It is an objective analytical model with a clear rationale

and structure: an aid to decision making, not a substitute for it!

• This application of the NSM considers the changed housing market context, especially low rates of new building since 2007, and uncertainties about future market developments.

• Current policy making may need to consider implementation issues in strategic housing-related reforms of governance and policies.

Using the Net Stock Model (2)• No regional disaggregation due to the scale of the NI

housing systemo And decisions about the allocation of land for housing affect

where new housing is developed and thus the regional distribution of households

o Thus locally-based assessments of need are also very important

• The model does not consider what specific types of dwellings should be provided, nor which organisations should provide them.

• Consultations with housing experts provided many views of the NSM – positive and negative – but nobody came up with a better overall model.

• The study had to use the NISRA 2008-based household projections. The 2012-based household projections were published 26 March 2015!

Challenges • NSM figure for need based on a number of key

assumptions – in particular rate of household formation and rate of private sector construction

• 2012-Household Projections indicate that the rate of household formation has halved between 2008-18 and 2012-22.

• Pressures on funding mean that the model faces being discredited by senior decision makers who wish to use HAG funding for other purposes.

• Wider policy issues of suitability of private rented sector for low income families rather than social housing

Conclusions• 2001-2011: many changes in trends relating to NI

population, households and housing provision.• Major changes also in NI housing system:

unprecedented housing boom and bust and rapid change in balance of tenures.

• Complex inter-relationship between demographic change and housing: not a one-way street.

• Continuing overall growth in population & households & an ageing population .

• But uncertainty about future developments, especially:o Relationships between housing and household formationo Impacts of policy changes on demography and housing

provisiono Extent and impacts of net migration changes