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					The Portsmouth Housing Market Assessing the Demand for Affordable Housing

Portsmouth Housing Market Key Characteristics

The Portsmouth Housing Market is currently characterised by:-

Rising demand for social housing Rising homelessness Increasing house prices Increasing private sector rents High levels of disrepair Low levels (historically) of public sector investment

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Housing Affordability - A National Issue

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Housing Affordability - A Local Issue

IN PORTSMOUTH
The average house in Portsmouth now costs £137,667. This is 6.2 times the average salary. House prices are rising by 10 per cent a year in Portsmouth while pay is rising by 6.67 per cent.

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Defining Affordable Housing - ODPM
Policies for affordable housing must cater for a range of needs:
for people whose incomes are well below the levels required for sustainable homeownership and who are likely to need to rent their homes on a long term basis; for people who aspire to homeownership but can only afford properties in lower price ranges; and for people with special needs who may require both subsidised accommodation and appropriate support in order to live in it successfully.
Taken from “Quality and choice: A decent home for all: The Housing Green Paper (ODPM, 2000)

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Defining Affordable Housing - Locally

Affordable Housing is defined in the City Local Plan as that “…which is accessible to those whose income does not enable them to buy or rent accommodation appropriate for their needs in the free housing market.”

In practice, the bulk of affordable housing in Portsmouth is social rented housing, provided by PCC and registered social landlords (RSLs). Other tenures, such as shared ownership, are not yet available in the city in significant numbers.

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Defining Affordability - Cost and Incomes
Affordability - Owner occupation Traditionally, mortgage lenders have applied a ratio of 3.5 times gross earnings to assess the affordability of mortgages. However, in light of reduced interest rates, many lenders will now offer 4, and in some cases, 5 times gross income. In Portsmouth, the average property price is 6.2 times the average income, while even prices at the lower end of the market are an average of 4.6 times average incomes.

Over half of the households in Portsmouth could not afford to buy a property at today’s prices, even in the lower quartile of the market.

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Defining Affordability - Cost and Incomes
Affordability - Private renting A rent of up to 30% of a tenants’ income has traditionally been seen as affordable. However, the picture is complicated by Housing Benefit, which subsidise rents of up to £180 per week.

In Portsmouth, residents on lower quartile pay (£14,400) would have to find 38% of their salary to rent an average property in the private sector.

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Demand - Shared Ownership

Shared ownership (“part rent, part buy”) is an increasingly popular way for many residents to access home ownership. As house price increases continue to out-pace increases in household incomes, this trend is likely to continue. Portsmouth Housing Association (PHA) has a waiting list of 558 applications to purchase homes with shared ownership leases. 62% of applicants want to purchase a home on a shared basis in Portsmouth. The majority of applicants are looking for a home with two or more bedrooms (see attached details).

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Demand - Key Workers
In February 2002, the former Housing Committee defined a “key worker” as…
“... someone employed, or who is seeking employment, in a defined occupation in Portsmouth or who earns less than £22,000 gross per annum (or such sum as advised by the Head of Property); but whose continuance or commencement of employment is jeopardised because their earned income is not sufficient to obtain accommodation suitable for their requirements”.

The Housing Committee resolved that responsibility for defining and updating criteria for key worker occupations should be devolved to the Head of Economic Development.
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Demand - Demographic Changes

Between 1981 and 2001, Portsmouth has experienced a 9% rise in the number of households in the city (there are now around 78,000 households).

During the same period, the city’s population has fallen by around 1.8%, meaning that the average household size is now smaller than it was 20 years ago, hence the increase in demand for one bedroom accommodation.

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The Portsmouth Housing Register
Portsmouth Housing Register 1990-2003 Total Demand for Social Housing - By Number of Bedrooms
9,000

Total Applicants/Transfers

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03

One Bedroom

Two Bedrooms

Three Bedrooms

Four Bedrooms

Traditionally, the Portsmouth Housing Register (PHR) has enabled PCC to gauge demand for social rented housing, including the number of bedrooms required. The PHR currently shows that the largest proportion of applicants need one bedroom accommodation.

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Housing Needs - A new approach
Traditional analysis of the housing register - too simplistic? Using the housing register to measure demand would give the impression that what we most need is new one-bed affordable housing. However, our allocations policy and more particularly, homelessness legislation, means that families with children are more likely to be given priority. Therefore - we should see the PHR as a “queue”, and in planning new housing provision, ask ourselves……. Who is next in the queue?
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Demand - Homelessness
Homeless Acceptances in Portsmouth -1997-2003
1200

1000

Homeless Acceptances

800

600

400

200

0

19 97 /9 8

19 98 /9 9

19 99 /0 0

20 00 /0 1

20 01 /0 2

20 02 /0 3

20 03 /0 4

20 04 /0 5

20 05 /0 6

The continuing rise in the number of households accepted as homeless (ie to whom PCC owes a re-housing duty) has put ever greater pressure on the availability of social lettings.

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20 06 /0 7

Housing Needs - Homelessness

In 2002/03, of the 804 households accepted as homeless by PCC, 609 included either dependent children or a pregnant woman. In the same year, PCC had only 881 family-sized dwellings (two bedrooms or larger), available for letting, including transfers. The demand for family-sized dwellings as a result of homelessness has placed great pressure on PCC’s ability to fulfil its statutory re-housing duties. This in turn has resulted in increased spending on temporary accommodation, and a reduction in choice for homeless households.

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Conclusions - Demand

There is a growing gap between the incomes of people in Portsmouth and the price of even the least expensive properties. There is substantial demand for social rented housing, as well as intermediate tenures, such as shared ownership. Homelessness, which has increased in recent years, now accounts for around half of all social lettings (PCC and RSL). More work needs to be done to understand the future housing needs of Portsmouth.

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