What came first, the chicken or the household projections?

By Vivienne Shirley, Senior Consultant 

The Office for National Statistics (ONS) has released dramatically lower household number projections than previously forecast, causing quite a stir in the planning world. 

The 2014 projection, calculated by the Department for Communities and Local Government (DCLG), stated the number of households would grow by 210,000 a year in England – resulting in 28 million homes by 2041. However, the ONS’s figures suggest there will only be 159,000 additional households each year, leading to 26.9 million by the same point. 

So why such different numbers? 

While the DCLG figures used demographic trends going back to 1971 to produce its figures, the ONS projections are based only on the time between 2001 and 2011. While a trend for households getting smaller can be seen from 1971 onwards, this stopped around 2001 – contributing to the lower household projections. The ONS also assumed a lower annual figure for net migration. 

A fair approach? 

The validity of the new timeframe has caused controversy, with many arguing that the ONS’s method of calculating household projections ‘bakes in’ a period when not nearly enough homes were built, forcibly curtailing the formation of new households. 

Matthew Spry, senior director at property consultancy Lichfields, noted: “The number of households that have formed can only ever match the number of dwellings that there are for people to live in. Statistically a household cannot form if it doesn’t have an extra house to form into.”  

Jim Gleeson, senior policy officer at the Greater London Authority, put it even more bluntly when he criticised the ONS’s approach, tweeting: “This is like saying that when we cut bus services the number of people taking the bus falls so we should cut bus services more.” 

Indeed the increasing number of young people living with their parents into adulthood would probably argue they would prefer to move out and form new households, but are prevented by sky-high house prices due to high demand and lagging supply. And it’s not just millennials who are affected. Data from listing site SpareRoom showed the number of individuals living in flat shares between the ages of 55 and 64 rose by 343% from 2011 to 2016 – again, it’s questionable if this is by choice. 

Lower housebuilding targets? 

Though some observers have embraced the new projections and claimed they prove the government’s aim of building 300,000 homes a year is too high, it is unlikely this figure will be lowered.  

If the new projections are used as the basis for the Standard Method of calculating housing need, included in the revised NPPF, this would mean only 214,000 new homes each year – prolonging the trend of low house building and high prices, and continuing to bog down the formation of new households.  

But the government said in July it will consult on changes to the standard methodology to address the fact the projections are not consistent with achieving 300,000 homes per annum, stating: “It should be noted that the intention is to consider adjusting the method to ensure that the starting point in the plan-making process is consistent in aggregate with the proposals in [last September’s] consultation and continues to be consistent with ensuring that 300,000 homes are built per year by the mid 2020’s.”  

This is good news. Otherwise, we could risk entering a downward spiral where lack of houses impacts household projections, and these projections then further limit housebuilding – actively perpetuating the housing crisis.