The Portsmouth Housing Market Assessing the Demand for Affordable Housing

1
The Portsmouth Housing Market - Assessing the
Demand for Affordable Housing
2
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

3
Housing Affordability - A National Issue
4
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.
5
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)

6
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.

7
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 todays prices,
  even in the lower quartile of the market.

8
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.

9
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).

10
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.

11
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 citys 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.

12
The Portsmouth Housing Register

• 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.

13
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?

14
Demand - Homelessness
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.
15
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
  PCCs 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.

16
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.