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									Annex B




Social and Affordable
Housing Analysis




ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND   KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                            B0
B1.1   INTRODUCTION AND METHOD


       The method of arriving at conclusions regarding the relative affordability of housing
       in County Kerry over the life of the Housing Strategy has followed closely that
       suggested in the Guidance issued by the Department of the Environment and Local
       Government. Essentially this involves:
        the calculation, based on available data and reasonable assumptions, of the range
          and distribution of average household incomes in the County, projected over the
          period of the Strategy;
        the calculation, based on available data and reasonable assumptions, of the range
          and distribution of average house prices in the County, also projected over the
          lifetime of the Strategy;
        the allocation of taken population and additional household projected numbers
          into assumed household income groupings and price bands; and
        the assessment of affordability of assumed new housing development, based on
          the application of the given affordability definitions to the resulting income and
          house price projections.

B1.2   HOUSEHOLD INCOMES

       Table 1 shows the range of average weekly household disposable incomes at
       national level as taken from the 1994/5 Household Budget Survey. The table also
       shows how the weekly data translates into average annual disposable household
       incomes and the proportions of total households within each category.


       Table 1 Household Income – National (1994/95)

            Income range              Weekly               % of all         Rolling Average          Average Annual
                                     Disposable         Households in         Disposable               Disposable
                                      Income            each Category           Weekly                 Household
                                        (IR£)                                 Household                  Income
                                                                                Income                    (IR£)
                                                                                  (IR£)
              1st Decile            <£77.92              11.57                 62.75                     3,263
             2nd Decile             <£121.60             10.54                 98.25                     5,109
             3rd Decile             <£154.70              9.48                133.84                     6,960
              4th Decile            <£206.39              9.60                173.72                     9,033
              5th Decile            <£268.76              9.74                215.16                    11,188
              6th Decile            <£340.89              9.56                264.04                    13,730
              7th Decile            <£425.89              9.81                321.60                    16,723
              8th Decile            <£524.18              9.58                384.41                    19,989
              9th Decile            <£698.69              9.78                469.92                    24,436
             10th Decile            >£698.69             10.34                695.31                    36,156
       Source: Base data from the CSO Household Budget Survey 1994/95



       Table 2 indicates the extent to which National and County Kerry per capita
       household disposable incomes are estimated to have differed over the period 1991 to
       1998.
       ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND            KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                          B1
Table 2 National and Kerry per Capita Household Disposable Income (IR£)
                  1991         1992       1993           1994          1995           1996         1997         1998

State          5,660     5,901     6,368     6,525                     7,098          7,629        8,400        9,324
Kerry          5,100     5,288     5,762     5,823                     6,204          6,575        7,293        7,935
Kerry as % of 90.1%      89.6%     90.5%     89.2%                     87.4%          86.2%        86.8%        85.1%
State
Source: CSO Household Incomes – Regions and Counties


From this Table, the average differential between the national and Kerry income
figures for the years 1991-1998 is 11.9%, and therefore a deflator of 0.881 is used in
arriving at the range and distribution of assumed household incomes for the County
in 1995. Table 3 shows the resulting income distribution, along with the assumed
distribution of the housing stock along household income categories.

Table 3 Estimated Distribution of Household Disposable Incomes and Households in County Kerry, 1995
Income Range       Weekly         % of Households         Average           Kerry      Average Annual          No. of
                  Disposable      in each Category        Annual           Deflator      Disposable         Households in
                   Income                                Disposable                      Household           Kerry, 19951
                     (IR£)                               Household                        Income
                                                          Income                           (Kerry)
                                                         (National)                         (IR£)
                                                            (IR£)
                                  1                  2                 3              4                    5
                                                                                      (Col 2*Col 3)        (38,711*
                                                                                                           (Col 1/100))
1st Decile      <£77.92           11.57              3,263.00          0.881               2,874.70        4,479
2nd Decile      <£121.60          10.54              5,109.00          0.881               4,501.03        4,080
3rd Decile      <£154.70          9.48               6,959.68          0.881               6,131.48        3,670
4th Decile      <£206.39          9.60               9,033.44          0.881               7,958.46        3,716
5th Decile      <£268.76          9.74               11,188.32         0.881               9,856.91        3,770
6th Decile      <£340.89          9.56               13,730.08         0.881              12,096.20        3,736
7th Decile      <£425.89          9.81               16,723.20         0.881              14,335.34        3,798
8th   Decile    <£524.18          9.58               19,989.32         0.881              17,135.11        3,709
9th Decile      <£698.69          9.78               24,435.84         0.881              20,946.72        3,786
10th Decile     >£698.69          10.35              36,156.12         0.881              30,993.49        4,007
Total                             100                                                                      38,711

Source: 1991 and 1996 Census data




The next stage is to project this distribution of household incomes over the period
1995-2006. This is done based on ESRI national per capita income projections, and
shown in Table 4 below.




ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND                    KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                          B2
Table 4 Household Income Distribution — Kerry, 1995-2006
Average
Annual
Disposable
Household     Disposable Income 1996-2006 (IR£)
Income
(Kerry)
1995          1996      1997      1998      1999     2000       2001     2002       2003      2004      2005       2006
% growth      10.5      13.9      13.5      10.6     9.1        7.3      7.8        7.8       7.7       8.0        7.2

2,875         3,177     3,618     4,107     4,542    4,955      5,317    5,732      6,179     6,654     7,187      7,704
4,501         4,974     5,665     6,430     7,111    7,758      8,325    8,974      9,674     10,419    11,253     12,063
6,131         6,775     7,717     8,759     9,687    10,569     11,340   12,225     13,178    14,193    15,329     16,432
7,958         8,794     10,016    11,369    12,574   13,718     14,719   15,868     17,105    18,422    19,896     21,329
9,857         10,892    12,406    14,081    15,573   16,990     18,231   19,653     21,186    22,817    24,642     26,416
12,096        13,366    15,224    17,279    19,111   20,850     22,372   24,117     25,998    28,000    30,240     32,418
14,335        15,841    18,042    20,478    22,649   24,710     26,514   28,582     30,811    33,184    35,838     38,419
17,135        18,934    21,566    24,478    27,072   29,536     31,692   34,164     36,829    39,664    42,838     45,922
20,947        23,146    26,363    29,922    33,094   36,106     38,742   41,763     45,021    48,488    52,367     56,137
30,993        34,248    39,008    44,274    48,967   53,423     57,323   61,795     66,615    71,744    77,483     83,062




Lastly in relation to income groupings, Table 5 shows the assumed distribution of
the projected annual number of new (additional) households, which are expected to
fall into each household income category each year to 2006.

The second half of this table presents calculated housing affordability thresholds
also applicable to these household income categories. Here, maximum house price
affordability is based on the criteria set out at Section 93 (1) of the Housing and
Development Act, along with an assumed 5% APR, 25 year mortgage and 90%
loan-to-house value (LTV) ratio, as well as the projected increasing levels of
disposable incomes shows in Table 4.




ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND                   KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                           B3
       Table 5 Additional Households and House Price Affordability
       Year       2000        2001        2002          2003       2004       2005                                          2006
       %       of Additional Households per year based on Income Distribution
       households
       11.57           76               77               72               73               74              76               77
       10.54           83               85               79               80               82              83               85
       9.48            92               94               88               89               91              92               94
       9.60            91               93               87               88               90              91               93
       9.74            90               91               85               87               88              90               92
       9.56            92               93               87               89               90              92               93
       9.81            89               91               85               86               88              89               91
       9.58            91               93               87               88               90              91               93
       9.78            89               91               85               87               88              90               91
       10.34           85               86               80               82               83              85               86

       Total           875              891              832              847              861             876              892

       %         of    Approximate Affordable House Price (IR£)
       households
       11.57           27,425           29,428           31,723           34,197           36,830          39,777           42,641
       10.54           42,941           46,076           49,670           53,544           57,667          62,280           66,764
       9.48            58,496           62,766           67,662           72,940           78,556          84,840           90,949
       9.60            75,926           81,468           87,823           94,673           101,963         110,120          118,049
       9.74            94,038           100,902          108,773          117,257          126,286         136,389          146,209
       9.56            115,401          123,825          133,484          143,895          154,975         167,373          179,424
       9.81            136,763          146,747          158,193          170,532          183,663         198,356          212,638
       9.58            163,474          175,407          189,089          203,838          219,533         237,096          254,167
       9.78            199,837          214,426          231,151          249,181          268,367         289,837          310,705
       10.34           295,686          317,272          342,019          368,696          397,086         428,853          459,730




B1.3   HOUSE PRICES


       Table 6 shows the trend in average house prices both in County Kerry and in the
       State as a whole, over the 1995 to 2000 period.


       Table 6 Average House Prices 1995-2000 (IR£)

                                     1995              1996             1997              1998            1999              2000
       Kerry                         57,931            68,137           72,708            70,058          82,425            102,080
       State                         60,912            66,174           83,461            96,181          119,953           141,660
       Note: A survey of property prices carried out in 2001 in the county signals some parts of the county having higher house prices and
       rates of price increase than those presented in this Table, which is based on DOE data. However, while the survey illustrates
       differences within the county, it does not provide a comprehensive county-wide dataset consistent with the returns made to
       Department of Environment and Local Government. For this reason, and in keeping with the method proposed by the DOE, as well
       as that adopted by most other counties of which we are aware, the DOE data has been adopted.




       Nationally, prices increased by approximately 130% over the period, and in Kerry
       the data shows an increase of 76%. The rate of house price increase in Kerry has
       been more subdued over the period than the rate nationally, and the evidence, both
       form an anecdotal perspective and from survey work carried out this year, is that
       growth rates tend to vary considerably within the county, with certain urban areas
       posting the highest growth rates.

       ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND                           KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                                      B4
Also based on Department of the Environment and Local Government data, Table 7
shows the assumed value distribution of the Kerry housing stock in 2000.

Table 7 Estimated 2000 Housing Stock Value Distribution
                      Range (IR£)                                        % of all Kerry Houses

                       0     to   50,000                                           7.6
                  50,000     to   70,000                                           16.1
                  70,000     to   90,000                                           24.1
                  90,000     to   110,000                                          20.6
                 110,000     to   130,000                                          14.1
                 130,000     to   150,000                                          7.7
                 150,000     to   170,000                                          3.2
                 170,000     to   190,000                                          2.2
                 190,000     to   210,000                                          0.9
                 210,000     and over                                              3.5

                           Total                                                   100




Table 8 indicates the average house price inflation levels which are used to project
forward the value ranges of the Kerry housing stock. This projections come from the
third Bacon Report to the Department of the Environment and Local Government. It
is not possible, within the scope of this exercise to predict with any confidence the
rate at which trends in Kerry may differ from these national projections.

Table 8 House Price Increase Projections assumed for this exercise
Year                         Annual % Increase projected for:
                             New Houses               Second-hand Houses             Average

2002                         12                      14                              13
2003                         9                       11                              10
2004                         8                       9                               8.5
2005                         7                       8                               7.5
2006                         6                       7                               6.5



Finally, in relation to house prices, Table 9 indicates the resulting estimated value
distribution of the Kerry housing stock over the life time of the present Housing
Strategy. This analysis assumes that the value relativities remain constant i.e. that
houses within all value ranges increase in similar proportions. The Table also shows
the expected number of additional (new) housing units which can be expected to fall
into each price category in the distribution over the period.




ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND            KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                  B5
Table 9 Numbers of Additional/New Housing Units in Kerry within each Price Band
  No. of                         2001               No. of                              2002
Additional                        £               Additional                             £
  Units                                             Units
                           up to    68,440                 63                              up    77,337
67                                                                               to
                68,440      to      95,816               134          77,337             to      108,272
143
                95,816      to      123,192              201          108,272            to      139,207
215
                123,192     to      150,568              172          139,207            to      170,142
184
                150,568     to      177,944              117          170,142            to      201,077
126
                177,944     to      205,320                64         201,077            to      232,012
69
                205,320     to      232,696                26         232,012            to      262,946
28
                232,696     to      260,072                18         262,946            to      293,881
20
                260,072     to      287,448                    8      293,881            to      324,816
8
                    in excess of    287,448                29                      in excess     324,816
31                                                                    of

                                                          832
891
                                 2003                                                   2004
                                  £                                                      £
                                    85,070                 65                                     92,301
64              up to                                                 up to
                85,070      to      119,099              138          92,301             to       129,223
136
                119,099     to      153,128              208          129,223            to       166,144
204
                153,128     to      187,156              178          166,144            to       203,064
175
                187,156     to      221,184              121          203,064            to       239,985
119
                221,184     to      255,213                66         239,985            to       276,906
65
                255,213     to      289,241                27         276,906            to       313,827
27
                289,241     to      323,269                19         313,827            to       350,747
19
                323,269     to      357,298                    8      350,747            to       387,668
8
                   in excess of     357,298                30                      in excess      387,668
30                                                                    of

                                                          861
847
                                 2005                                                   2006
                                  £                                                      £
                                    99,224                 67                                    105,674
66              up to                                                 up to
                99,224      to      138,914              143                  105,674    to      147,943
141
                138,914     to      178,604              215                  147,943    to      190,213
211
                178,604     to      218,294              184                  190,213    to      232,483
181
                218,294     to      257,984              126                  232,483    to      274,753
124


ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND        KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                 B6
                       257,984     to    297,674                    69               274,753      to      317,023
       68
                       297,674     to    337,364                    28               317,023      to      359,293
       28
                       337,364     to    377,053                    20               359,293      to      401,561
       19
                       377,053     to    416,743                        8            401,561      to      443,831
       8
                          in excess of   416,743                    31                      in excess     443,831
       31                                                                      of

                                                                  892
       876
       Source: House price & distribution data, DoELG data system



B1.4   AFFORDABILITY ANALYSIS

       The basis for calculating the proportion of new households which are unlikely to
       meet the affordability definitions as set out in the Planning and Development Act,
       lies in a comparison of Tables 5 and 9.

       Beginning with the year 2001, we can see that 256 (77+85+94) additional
       households will have an upper affordability threshold of £62,766, while for a further
       93 the threshold will be £81,468. From Table 9 we can see that 67 housing units are
       expected to be provided at a price of up to £68,440. Assuming an even distribution,
       this suggests that 284 (256+28) households will have an upper affordability
       threshold of £68,440, while only 67 units are expected up to or below that price. The
       shortfall, 217, translates into 24% of the total (891) additional housing units in the
       year.



       When repeated for later years, the method reveals the following results.

       Table 10 Summary of Affordability Analysis
       Year                   No.    of    Additional    Total Number of New              %      of     additional
                              Households          not    Houses Expected                  households appropriate
                              meeting Affordability                                       for     "social     and
                              Threshold                                                   affordable"     housing
                                                                                          reserve
       2001                        217                   891                              24.4%
       2002                        234                   832                              28.1%
       2003                        228                   847                              26.9%
       2004                        234                   861                              27.2%
       2005                        237                   876                              27.1%
       2006                        239                   892                              26.8%



       The conclusion therefore is that reasonable assumptions about the direction of
       household incomes and house prices in County Kerry warrant the adoption of the
       maximum 20% reserve of new residential development for the life of the current
       Strategy.

       ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND          KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                        B7
ERM ENVIRONMENTAL RESOURCES MANAGEMENT IRELAND        KERRY HOUSING STRATEGY 2001-2006 (27 JULY 2001)
                                                 B8

								
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