1. New Home Market under the New Policy Agenda
John Stewart
HBF Director of Economic Affairs
20 March 2007

2. Presentation Outline Key policy influences Housing demand & supply
Planning reform
Environmental sustainability
Callcutt Review

3. Key Policy Influences

4. Key policy influences
15 years of economic stability, low interest rates
Rapid household growth
Climate change

5. 15 years of economic stability
Subdued cycle
Rising living standards
Inflation tamed => low interest rates
No major policy mistakes
Benign global economic trends
Impact on policy, business, home buyers

6. Rapid household growth
Household projections England:
2004-based: 223,000 pa ( )
2003-based: 209,000 pa ( )
1996-based: 152,000 pa ( )
Net migration: 33% growth

7. Housing demand Low interest rates Rising living standards
Rapid household growth
=> Strong housing demand/need

8. Housing supply Total housing completions (England): 1993-2000: flat
2001: 130,000 (historic low)
2006: 160,000 (+23% 2001)
Government target: 200,000 pa by 2016
Household growth: 223,000 pa

10. Supply/demand imbalance
Imbalance to continue well into future =>
Affordability crisis to persist
FTBs will struggle
Ready supply of young tenants for PRS

11. Planning Reform Response

12. Planning reform response
Barker Reviews
Government house building target
PPS3 and guidance
PGS, Cross-cutting Infrastructure Review

13. Planning reform: housing market perspective
Adequate housing numbers
In the right locations
Of the right types (house types, mix, densities, parking, design, products)

14. Adequate housing numbers
Closing the 40-60,000 pa gap:
Is new planning system up to the job?
Will central government enforce – regional assemblies & local authorities
Will infrastructure be delivered
Early omens!

15. In the right locations…
Pressures not just confined to the south…

17. Of the right types ‘Size, type and affordability’ unresolved…
Prescriptive LA mix policies?
Density under PPS3?
Parking under PPS3?
Context: 46% apartments in 2006

18. Environmental Sustainability Climate Change

19. Government target All new homes zero carbon by 2016
Reduced water consumption
Reduced waste
Context: 85%+ of new homes are privately built for private buyers

20. Consumer perspective Zero-carbon homes must:
Feel and look like a home – type, density, external and internal design, parking
Be comfortable, liveable, healthy - specification
Be mortgageable, insurable, hold resale value
With reliable, affordable, managed energy supply

21. Consumer perspective As zero-carbon homes developed, must:
Not run too far ahead of home buyers
Complement technical with consumer research
Learn how to market benefits
Speak same language as home buyers

22. Consumer perspective
“We cannot experiment on our customers” - most of whom are buyers
Warning from failed post-war system-built experiment - on social tenants

23. Callcutt Review

24. Callcutt Review
An opportunity to put customers first in the drive for 200,000 zero-carbon, quality homes
Big risks if driven by technocrats and environmental enthusiasts (including LAs)

25. New Home Market under the New Policy Agenda
John Stewart
HBF Director of Economic Affairs
20 March 2007