Memorandum by North East Housing Forum
This document is submitted to the select committee
on behalf of the North East Housing Forum. The Forum represents
the views of housing providers in the North East of England, and
membership comprises local authorities, registered social landlords
and representatives of the Chartered Institute of Housing, the
Council for Mortgage Lenders, the House Builders Federation, the
Local Government Association, the National Housing Federation,
the North East Council for Tenants and Residents and the Northern
Housing Consortium. A number of our members will be submitting
their own views to the committee, based on the detailed experience
and understanding arising from their own work based activities.
This submission is intended to give a broader regional perspective.
The North East of England is a diverse and beautiful
region, stretching from Berwick in the North to Teesside in the
South. Over half the region is rural, incorporating two national
parks (Northumberland and part of the Border forest park) The
North Pennines and the Northumberland coast are designated as
Areas of Outstanding Natural Beauty. The region has a vibrant
history, being home to Hadrians Wall and legacies of early ChristianityHoly
island on Lindisfarne and the castle and cathedral of mediaeval
Durham, which are both World Heritage sites.
Whilst there may be a perception that low property
values and low demand in parts of the region make affordability
less of an issue in the North East, this is not the case in some
The North East Regional Housing Statement talks
about the housing market as follows:
"The structure of the housing market in
the North East has distinctive characteristics, including the
lowest level of owner occupation of any English region (63 per
cent) a relatively small private rental sector (8 per cent) and
relatively high levels of social rented housing. This is especially
true in areas previously dominated by traditional manufacturing
House prices are significantly lower than the
national average, but there are considerable differences within
the region. Prices in older urban areas eg parts of Tyne and Wear
and Teesside are very low, while average house prices in semi
urban areas in Northumberland and Durham are relatively high."
The need for affordable housing in the North
East can be categorised as follows:
provision of affordable homes for
households on relatively low incomes living in high cost areas,
where the maintenance of balanced and mixed communities is threatened
by high housing costs (for example in parts of Newcastle and Durham);
providing affordable homes in high
cost but relatively low income rural or semi-rural areas where
housing markets are driven by demand from commuters into the urban
areas (for example in Tynedale). Again, balanced and mixed communities
are increasingly difficult to sustain. The particular issues faced
in rural settlements should be recognised as expensive and difficult
Affordable housing can be in any tenure. The
relationship between income and housing costs is the crucial issue.
A household is deemed as living in unaffordable housing if its
housing costs are greater than 30 per cent of its net equivalent
household income (which takes into account the number of people
the income has to support) and net equivalent income is less than
£763 per month.
By definition, affordable housing is required
everywhere, but it is in areas where the mismatch between housing
needs and households' ability to meet the cost of fulfilling those
needs is greatest that the need for clear strategies for intervention
to achieve sufficient affordable housing is crucial to the sustainability
of balanced communities.
Firstly, there are areas where economic success,
high employment and increasing earnings have fuelled rising house
Parts of Newcastle and Durham fall into this
The problems in these areas are essentially
identical to the much-publicised issues facing other prosperous
parts of the country, including the South East of England. While
most benefit from the rising tide of prosperity, there are inevitably
some households whose income does not keep up with the rest of
the communitythe economically inactive or those on low
wages. However, these areas are likely to have lost a proportion
of their social housing stock through Right to Buy sales, and
they have longer waiting lists for what remains. Investment in
new provision of affordable housing, whether for rent, sale or
shared ownership, has failed to match the decline in the social
The second category already mentioned where
affordability is an issue in the North East region is mainly rural
areas where the market is driven by commuters or purchasers coming
from outside the local employment market.
Examples of communities where this problem is
in evidence are parts of Northumberland (Tynedale, Castle Morpeth)
and parts of County Durham and Teesdale.
A lack of affordable housing makes the achievement
or maintenance of balanced, mixed communities ever more difficult.
If there are no local services and poor transport facilities then
people, particularly young adults, are likely to move away. This
has had the effect in some rural areas of making some rural villages
simply places to live, rather than to work, and house mainly better
off households. Where jobs do exist they are mainly low paid service
industries where employers struggle to fill vacancies. This major
social change may now be irreversible in some areas.
The North East Housing Forum has commissioned
a study of the housing markets in the North East from the Centre
for Urban and Regional Studies, University of Birmingham.
Unfortunately, the study will not be completed
in time to submit detailed evidence by the deadline date required.
However, some key points, which have already
been identified, can be summarised as follows;
This study is concerned primarily with low and
changing demand, rather than with problems of affordability which
represent the opposite end of the spectrum, but it is useful to
look at this in order to emphasise the problems faced by those
districts where there is excessive demand rather than market weakness
in the private sector.
A discussion of house prices shows contrasts
between districts and within districts which are indicative of
high levels of demand for private housing parts of Northumberland,
County Durham and smaller areas within the former Tyne and Wear
and Teesside areas.
Table 2.16 below introduces district level data
on incomes and earnings and relates this to house prices to produce
indicators of affordability.
There are a number of limitations to the data.
Earnings data is drawn from the New Earnings Survey and excludes
those not in employment. It is also data at individual rather
than household level. Inland Revenue data refers to those paying
tax. The indicators in the table are expressed as ratios showing
the relative affordability of housing between districts rather
than measuring absolute affordabilitysuch as the proportion
of households unable to afford to buy. Three indicators are shown
in the table:
the ratio of the average dwelling
price in 2000 to the annual average gross earnings;
the ratio of the average dwelling
price in 2000 to the annual gross earnings level of the most poorly
paid 10 per cent of the workforce; and
the ratio of the average dwelling
price in 2000 to mean income from Inland Revenue data.
INDICATORS OF AFFORDABILITY (CENTRE FOR URBAN
AND REGIONAL STUDIES)
|New Earnings survey 2000
||Inl Rev 1999-2000
|Ave gross weekly earnings||10% earning less than:
||Ave Dwelling price 2000||Mean income
||Ave price 2000 to annual ave gross
||Ave price 2000 to annual earnings lowest
||Ave price 2000 to mean||
|Newcastle upon Tyne||390.4
|Redcar and Cleveland UA||425.0
Source: Dataspring, University of Cambridge. Sorted
on ratio of average price 2000 to annual ave gross earnings.
The picture which emerges is reasonably consistent across
all three indicators where data is available. Castle Morpeth demonstrates
significantly higher earnings-income/price ratios (and hence greater
affordability problems) than any other authority in the region.
Tynedale, Teesdale, Alnwick and Berwick also have significant
problems but unfortunately data for these areas is only available
on one indicator. Darlington , Newcastle and Durham also appear
to have affordability problems. In most of the remaining districts,
ratios between earnings and prices are significantly lower. It
is not possible from this data to estimate the proportions of
households which could afford house purchasethis depends
on many other factors including the distribution of income and
the supply of lower cost property. However, the table provides
an indication that in some parts of the region there are likely
to be significant affordability problems compounded by the relatively
small size of the social rented sector in some of these districts.