Undertaking a Housing Need and Market Analysis

A local housing strategy is traditionally underpinned by an analysis of housing need and demand and the extent to which the housing market is able to respond to this demand. The notion of demand in this context is important. We noted in Chap. 3 that in the private housing market, price is a key indicator of demand. The demand for housing consists of households who wish to enter a local housing market—the quantity of housing that households are willing and able to buy or rent. In a local market, demand for housing is influenced by demographic factors, especially the rate at which new households are formed, prices in the local housing market and other housing markets, the economic circumstances of the households and of the local housing market, the perceived advantages of the local area in terms of its access to a range of goods and services, and particular tastes or preferences of consumers.

When demand for housing increases within a particular region—due to population growth, household formation trends or economic driv- ers—prices are expected to rise. In theory, this price signal should trigger increased housing production, leading to a long run equilibrium between demand and supply, moderating price inflation over time.

However, as noted throughout this book, for many reasons house prices are an imperfect indicator, and supply is very imperfect at responding to changes in demand, as outlined in Chap. 3, so that in many countries demand tends to push up prices rather than stimulate new supply. Those without sufficient financial means to pay for adequate housing on the private market represent ‘latent’ demand—which is not able to be exercised due to price constraints. Other barriers, such as discrimination in the private rental market or a lack of housing suitable for large families might also result in unmet housing needs. A housing needs analysis seeks to measure the extent of this overall housing demand and need, including unmet needs, within a particular local or regional community.

A corresponding analysis of the housing market then determines the extent to which these needs are being met through existing and planned new housing supply, and across the different housing tenures. While the total supply often attracts the main focus as a key indicator, it is very important to also consider the housing stock in all of its forms—the level of different sorts of housing stock according to dwelling type, tenure and price, and the differential affordability for groups across the income spectrum.

 
Source
< Prev   CONTENTS   Source   Next >