Demographics

A key trend in recent times has been towards smaller household sizes as a result of people’s preference for living on their own, increased life expectancies and a decline in fertility rates. This means the demand for housing can be increasing, even when there is no population growth in an area. Until the GFC, the number of sub-groups forming separate households had been increasing, across many parts of the Western world and these trends were forecast to continue. However, affordability pressures in the lead up to and following the GFC were in some countries associated with slowing of this trend and in some cases a marginal increase in average household sizes. When measured in relation to projected rates of household formation, a gap between anticipated and actual households was identified in nations such as the UK and Australia by around 2012/13, which has been interpreted as an indicator of affordability pressures which constrain demand (Fitzpatrick et al. 2015b, Chap. 5). This is consistent with evidence from a range of studies over several decades which show that household formation, although strongly linked to age structure, does also respond to economic factors such as income and employment as well as to housing market factors such as house prices and social housing availability. Bramley et al. (1997) review earlier work including several US studies, while Peterson et al. (DETR 1999b), Ermisch (1999), Clark and Mulder (2000), Andrew and Meen (2003), Meen et al. (2007), Meen (2011), Meen and Nygaard (2008) and Bramley et al. (2006a, b) represent a range of evidence for the UK. Among more recent literature, we can find several studies from the USA in particular claiming clear evidence of cyclical recession effects (from incomes and labour market trends) on household formation (Lee and Painter 2013; Dyrda et al. 2012; Paciorek 2013). Some of these also point to the effects of housing costs (Paciorek 2013) or the sub-prime (credit) crisis. Some studies have focussed on the longer-term decline of owner occupation, suggesting that this situation was compounded by declining young headship (Rosenbaum 2013). Studies comparing ownership rates by ethnic group were shown to be potentially misleading for the same reason (Yu and Haan 2012; Nygaard 2011; Yu and Myers 2010).

The age structure of the population provides important information about existing and potential future demand. Although research suggests that housing ‘careers’ appear to be changing in line with wider societal and economic trends, tenure preferences and specific types of housing needs roughly accord with particular age cohorts (Kendig 1984; Beer and Faulkner 2009; Borgersen 2014). For instance, younger households (15-24 years) often live in shared rental tenure. They may be mobile while undertaking education or building a career. Commonly, there will be higher concentrations of this age group near colleges and universities, so purpose designed student accommodation may help ease wider pressure on the local housing market. The middle group (25-44 years) will often include couples with children, often purchasing or aspiring to purchase a home—but affordability problems are making this more of an aspiration than a reality for ‘generation rent’. Typically, this group will require larger dwellings and long-term forms of housing tenure.

Household size reduces as children leave home, and there are typically higher rates of outright home ownership amongst the 45-64 year age groups and beyond. Older cohorts may require retirement homes or hostels for the aged.

With high rates of international immigration, population growth often implies sudden housing demand in a way that natural increases do not. While population growth through natural increase does not immediately translate into new household formation, adult migrants and their families create an immediate housing need. To fully assess implications for immediate and long-term housing demand, it is important to distinguish between temporary migrants—such as international students— and those who are likely to migrate on a permanent basis. Migration is assuming ever greater importance as a social and political issue in many countries, including most of Europe, as political instability in the Middle East and Africa is generating a wave of refugees to add to the growing streams of economic migrants.

 
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