Affordability and Supply: The Rural Dimension

Abstract

This article examines recent evidence on affordability, the need for affordable housing and patterns of housing supply across the urban–rural spectrum in England. It uses adapted versions of several models derived from previous research but incorporating relatively recent data to illuminate these issues. It is found that, whether measured at the local authority or ward level, rural areas are more affordable than urban areas, within broad regions and overall. Rural areas in the North and the Midlands have greater net needs mainly because of migration and a lack the supply of social housing. Rural areas (especially further north) have seen much more new building and net gains in housing stock over the past 10–20 years, and prices grew less in rural areas over the whole market cycle, despite evidence of continuing demand.

Acknowledgements

Many of the detailed data analysed in this article were compiled as part of a research project entitled ‘Housing Investment and Neighbourhood Market Change’ supported by the Joseph Rowntree Foundation. Some of these data were shared with a parallel project entitled ‘Developing a System to Measure and Model Housing Demand’ supported by the then Office of the Deputy Prime Minister (now Communities and Local Government). The authors acknowledge the financial and practical support of these organizations, and a number of individuals within them, both in providing general advice and support to that research and in providing specific assistance in access to data. Nevertheless, the analyses reported here, and the conclusions derived, are entirely the responsibility of the authors.

Notes

1. Wilcox's studies take the second step but not the third step.

2. The primary criterion of affordability for purchase is a ‘lending multiplier’ ratio of mortgage ( =  price) to income of 4.0 for one earner or of 3.4 for two earners; this is consistent with evidence of lending patterns in the Regulated Mortgage Survey, referring to upper quartile ratios in higher priced regions; the secondary test ensures that residual income after tax, National Insurance and mortgage payment plus allowance for insurance and repair exceeds 120% of the Income Support ‘poverty line’.

3. Private rents are estimated from (a) modelled values for all private tenants by size based on Survey of English Housing 2003/04 applied to all wards/LAs in England; (b) asking rents compiled by Hometrack and reported in Wilcox (2007).

4. The NHPAU (2007, 2008) have published forecasts based on the ‘affordability’ economic model developed by Reading University for CLG, applying different planning scenarios; these generally show affordability static in the short term but deteriorating in the longer term.

5. Road distance to retail centres with >50,000 m² of floorspace; the Indices of Multiple Deprivation ‘Geographical Access Barriers’ index measures distance to a range of service facilities including a shop, garage, post office, doctor.

6. Bramley et al.'s (2007) Transforming Places study.

7. Nationwide Building Society ‘type 3’ comprises houses that are not detached or bungalows, with 1–3 bedrooms and central heating.