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Shortage is undermining recovery

Housing crisis due to ‘wrong land’ earmarked for homes

housebuildingScotland’s housing crisis is partly a result of the wrong sites being earmarked for building, according to new research.

More than a third of  the land in the central belt allocated for housebuilding has little chance of being developed as it is in the wrong place and will not yield the required returns.

The findings follow recent figures showing that just 15,436 homes were built in the year to last September 2014, some 60 % below the level years ago and well below the Scottish Government’s annual target of 21,230.

The problem is particularly acute in Glasgow where 2,575 homes were built against a target of 10,795, while Edinburgh saw 3,585 new homes built last year, well down on its target of 7,170.

Last year actually saw an improving, with 20% more homes built than in 2013’s, but research by planning design and economics consultancy Nathaniel Lichfield & Partners suggests the allocation of unsuitable housing sites is a drag on development.

The report entitled “Supporting Scotland’s Growth – Housing: Location as a Barrier to Housing Delivery in the Central Belt?”- found that in some areas almost two-thirds of the allocated land for new homes has little hope of development.

Those sites in ‘weak market areas’ are deemed unlikely to be developed under NLP’s Market Strength Index test – a composite of housing demand and market strength.

The research says the weak market sites tend to be in locations where the average house price is £100,000 or less and the average household income £30,000 or less.

In Glasgow 10,838 or 67% of allocated housing sites are in weak market areas, in Inverclyde there are 3,116 (66%), in Renfrewshire 635 (77%) and West Dunbartonshire 3,169 (59%). On the east coast 5,223 (63%) of allocated sites in Fife are in weak market areas.

Nicola Woodward, NLP director and head of its recently opened Edinburgh office, said: “In simple terms, the Edinburgh and Glasgow city-regions are failing to deliver the rate of housing that is required. Unlike in other parts of the UK, this is not due to a failure to prepare Local Plans or to allocate land.

“The analysis in this report suggests one reason may be that the wrong land is being allocated in the wrong places: in the aftermath of a housing market recession, with housing transactions and values still below their 2007/8 peak, the allocation of sites in poorer market areas is likely to undermine delivery.”

Ms Woodward said there may be a number of reasons for this. “Planning authorities may be continuing to allocate legacy sites, where current suitability has not been sufficiently scrutinised.

“They may also be allocating brownfield sites which have remediation issues, or cleared sites on large housing estates which may not be attractive to the private sector, or where values are so low that it would cost more to build a new home than it could be sold for.”

She said planning authorities need to recognise the positive impact of new development on the edges of areas of strong market demand and similarly recognise the scale of development which will be needed to affect change in weaker areas.

The report says the strongest markets, where house prices are on average more than £175,000, have the greatest prospects for bringing forward new housing as the market will have confidence that demand levels, and values, justify the costs and risks associated with development.

However Ms Woodward added: “In the interests of delivering more homes in the shorter term, it is of concern that just 42% of housing capacity on housing allocations is in the kind of stronger market locations that will support delivery.”

If Scotland achieved its annual housebuilding targets it would create at least an extra 7,000 jobs a year and boost the economy by £200m.

 

 



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