I recently read some interesting research by Matthew Chell on housing market demand, sponsored by the Housing Corporation. Chell's study raises some serious questions about the role of the social housing sector in a changing marketplace – just the kind of thing that the National Housing Federation's Housing's Better Future project is trying to get to grips with.

Chell identified three main sectors of development:

  • "market" sector: people who do not need assistance with housing costs
  • "social" sector: people who need assistance whatever the economic climate
  • "transitional" sector: people who aspire to homeownership but who are constrained by the economy or personal finances.

Owner-occupation remains the tenure of choice for the majority of British people and the critical changes in demand for affordable housing arise from this "transitional" sector.

In a later report, Chell subdivides the transitional sector into three groups:

  • overstretched owner-occupiers
  • precarious private renters
  • market potential sector.

    In unfavourable economic conditions, the first two groups would increase demand for social housing; the third would reduce demand if circumstances were more favourable. But these divisions are changing.

    There are 2.6m households in social-rented accommodation who cannot afford to buy or rent privately, and this figure is set to rise by about 9500 households a year to 2021.

    There are around 675,000 owner-occupied households that struggle to afford their housing costs long-term and this figure is not expected to change significantly

    But there are also some 15.2m owner-occupied and private-rented households that need no assistance with housing costs. This figure is increasing at the rate of 120,000 households a year. However, there are around 675,000 owner-occupied households that struggle to afford their housing costs long-term and this figure is not expected to change significantly. Meanwhile, approximately 940,000 households that rent in the private sector need help with their housing costs, and this figure is increasing by about 30,000 households a year. There are also around 1.5m households in social-rented accommodation that could afford to buy or rent a home in the private sector. This is expected to decline by about 7500 households a year.

    These figures suggest that social housing is becoming residualised. However, there is a growing recognition that sustainable communities need a mix of tenures, and areas with concentrations of social accommodation must avoid becoming areas of concentrated disadvantage. Furthermore, over-65s, lone parents and teenagers tend to be concentrated in social housing, and this concentration is expected to increase.

    This is an extremely brief example of some very complicated data, but it suggests that we need some radical changes in housing policy. Recent government announcements, such as the possibility of housing benefit being paid to owner-occupiers in financial difficulties, indicate that there is a significant shift underway towards programmes affording varying degrees of market intervention, particularly to support people's housing requirements irrespective of tenure.

    How do housing organisations respond to such complicated and conflicting market demands and the changing role of the state? This is as much a southern as a northern requirement, albeit for very different reasons and with different policy tools required.

    Inevitably, more products to support people's housing requirements will become available. Tackling the disruption that results from people having to move as the result of a change in circumstances will lead to a demand for flexible tenure and a range of financial products to help households remain in their home if their circumstances change.

    • Source

    Housing Today

    Postscript

    David Cowans is chief executive of the Places for People Group