New Home Market under the New Policy Agenda

New Home Market under the New Policy Agenda John Stewart HBF Director of Economic Affairs 20 March 2007

Presentation Outline • • • Key policy influences Housing demand & supply Planning reform Environmental sustainability Callcutt Review

Key Policy Influences

Key policy influences • 15 years of economic stability, low interest rates • Rapid household growth • Climate change

15 years of economic stability • Subdued cycle • Rising living standards • Inflation tamed => low interest rates • No major policy mistakes • Benign global economic trends Impact on policy, business, home buyers

Rapid household growth Household projections England: 2004 -based: 223, 000 pa (2004 -26) 2003 -based: 209, 000 pa (2003 -26) 1996 -based: 152, 000 pa (1996 -2021) Net migration: 33% growth 2004 -26

Housing demand • Low interest rates • Rising living standards • Rapid household growth => Strong housing demand/need

Housing supply Total housing completions (England): 1993 -2000: flat 2001: 130, 000 (historic low) 2006: 160, 000 (+23% 2001) Government target: 200, 000 pa by 2016 Household growth: 223, 000 pa

Supply/demand imbalance Imbalance to continue well into future => • Affordability crisis to persist • FTBs will struggle • Ready supply of young tenants for PRS

Planning Reform Response

Planning reform response • • Barker Reviews Government house building target PPS 3 and guidance PGS, Cross-cutting Infrastructure Review

Planning reform: housing market perspective • Adequate housing numbers • In the right locations • Of the right types (house types, mix, densities, parking, design, products)

Adequate housing numbers Closing the 40 -60, 000 pa gap: • Is new planning system up to the job? • Will central government enforce – regional assemblies & local authorities • Will infrastructure be delivered Early omens!

In the right locations… Pressures not just confined to the south…

Of the right types ‘Size, type and affordability’ unresolved… • Prescriptive LA mix policies? • Density under PPS 3? • Parking under PPS 3? Context: 46% apartments in 2006

Environmental Sustainability Climate Change

Government target • All new homes zero carbon by 2016 • Reduced water consumption • Reduced waste Context: 85%+ of new homes are privately built for private buyers

Consumer perspective Zero-carbon homes must: • Feel and look like a home – type, density, external and internal design, parking • Be comfortable, liveable, healthy - specification • Be mortgageable, insurable, hold resale value • With reliable, affordable, managed energy supply

Consumer perspective As zero-carbon homes developed, must: • Not run too far ahead of home buyers • Complement technical with consumer research • Learn how to market benefits • Speak same language as home buyers

Consumer perspective “We cannot experiment on our customers” - most of whom are buyers Warning from failed post-war system-built experiment - on social tenants

Callcutt Review

Callcutt Review An opportunity to put customers first in the drive for 200, 000 zero-carbon, quality homes Big risks if driven by technocrats and environmental enthusiasts (including LAs)

New Home Market under the New Policy Agenda John Stewart HBF Director of Economic Affairs 20 March 2007