Demographic demands on housing
Friday 11th January 2013, 5:00PM GMT.
Regular contributor Trevor Cooper considers the island’s housing requirements…
The 2011 Housing Needs Survey was published this time last month by the Housing and Environment departments. The assessment follows similar studies in 2001 and 2006 and was primarily based on the analysis of 1,511 households interviewed across Guernsey.
The 87-page report of the survey made startling headlines last month by stating that 451 new homes per year are needed for the next five years. This is a concern for an island the size of Guernsey and deserves closer examination.
The expression ‘new homes’ relates not just to new developments but also, the report suggests, to the conversion of existing residential property into smaller units and by converting other buildings into dwellings.
Emphasis is also made of the difference between ‘housing need’, which arises when a household experiences housing problems but cannot afford to resolve them, and ‘housing demand’, which is a household needing or wanting to move and able to afford to do so within its budget. The report quantifies 38% of the quoted 451 new homes as being in the social housing or shared-ownership sector and 62% in the private-housing sector.
The percentage of properties leased by the States’ Housing Department and the Guernsey Housing Association has increased by a meagre 0.3% since 2006.
It is possible that Housing’s focus on improving the existing social housing stock and the determined work of the Guernsey Housing Association has already had an impact since the survey, which was conducted during September and October 2011. However, the report’s claim that 38% of the required 451 new homes are in the social housing and shared-ownership sector suggests an alarming shortfall. And yet Housing’s chief officer, Stephen Langford, confidently announced in last Thursday’s Guernsey Press that the department will reduce its budget by £2m. this year, so provision is either in hand or a shortfall will continue.
Also considered in the report is the tenure of Guernsey properties, which has changed between 2006 and 2011. According to the report, 38% of all residential units across the island are owned outright while 32% are owned with a mortgage – a slight fall since 2006, when the total figure stood at 74%. This 4% decline is reflected in an increase in the private rented sector since 2006, which now comprises 21% of residential units in Guernsey. The ‘buy-to-let’ craze has undoubtedly influenced this shift.
Another significant change since 2006 is the cost of renting in the private sector, which has become considerably more expensive. Consequently, a few households that could previously afford market rents are now identified as requiring social or intermediate housing.
For the purpose of analysis, the report states that a household spending more than 25% of its income on rent is considered to be living in unaffordable accommodation. The figure is taken from the States Housing Department’s Rent and Rebate Scheme where social housing tenants are charged a rebated rent that equates to no more than 25% of their income. According to the survey, rents within social housing are typically in the region of 60% to 70% of the lowest quartile private rent level.
The report also grasps that assessing the ability of islanders to afford their own home (as opposed to renting) is complex because owner occupiers usually rely upon a mortgage to purchase a property.
Since the last survey in 2006, the recession has made it more difficult for households to obtain a mortgage. Guernsey households can typically borrow an amount up to five times their household income. Higher multipliers were available in 2006 and in recent years purchasers have also been required to contribute larger deposits, which made the amount borrowable by Guernsey households generally lower in 2011. Conversely, property prices have in the main risen in the intervening period, albeit on a diminishing scale when compared with ascending market values.
According to the sales records for local-market properties for the first three quarters of 2011, the Guernsey Policy and Research Unit has established that lowest-quartile prices for owner occupation by property size in 2011 was £196,650 for a one-bedroom unit; £270,750 for two bedrooms; £363,375 for three bedrooms; £436,050 for four bedrooms and £545,000 for five-plus.
This is at odds with the Research Unit’s findings that the average house price in Guernsey using the median average method is currently £445,326 – nearly £10,000 more than that paid for a four-bedroom and therefore above the average house in the lowest quartile.
On a positive note, the survey shows that 74% of Guernsey households are very satisfied with their current home, with a further 19% fairly satisfied. I will look more closely at this next week and study the survey’s findings on some of the problems householders encounter with their properties, where new development might be focused and the provisions being made for Guernsey’s ageing population.
- A copy of the 2011 Housing Needs Survey is available to download at www.gov.gg/HNS2011.
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