Household Projections and Housing Targets

The latest projections from the Office of National Statistics (ONS) show that between 2022 and 2032, the number of households in England is expected to grow from 23.5 million to 25.9 million, an increase of 10.3%. That is equivalent to an average of 242,000 additional households per year. Nearly two-thirds of that increase will come from households headed by someone over 65 years old. Rates of increase will be much lower for households headed by someone under retirement age.

An ageing population and a decline in the birth rate will bring a significant change in the pattern of households across England within the next decade. Households including children are expected to fall by 8.4% in the 10 years ending in 2032, from 6.7 million to 6.1 million; and such households will therefore fall from 28.3% to 23.6% of the total number of households. The corollary is that the proportion of households without children will rise from 71.7 % to 76.4%. And one-person households are expected to increase by 19.6%, from 7.1 million to 8.6 million, with particularly strong increases among the elderly.

The pattern of these changes varies across England, and indeed across London. This reflects significant differences in the age profile of the population in local authority areas in different parts of the country; and also differing patterns of migration both within the UK and to-and-from other countries.

Households in London

The number of households in London as a whole (excluding the special case of the City of London) is projected to increase by 10.8%, from 3.4 million to 3.8 million. But Tower Hamlets shows the highest rate of increase of any local authority in England, at 25.9%, and Newham (16.1%), Camden (14.1%) and Greenwich (13.6%) also show high rates of increase. But Enfield shows a much lower rate of increase at only 4.6%, along with Bromley (6.9%) and Richmond on Thames (7.7%). Higher rates of increase thus seem to be characteristic of most inner London boroughs, while in outer London the rates tend to be lower. But there are exceptions: Hillingdon shows a higher-than-average increase of 12.2%, while Lambeth is lower than average at 8.1%.

Household Formation and Housing Targets

Following the reforms introduced by the Government last year, household projections no longer play any part in the standard formula for determining housing targets. But it is worth noting that the housing target now set for London is 88,000 completions a year, more than twice the projected increase of 36,600 each year in the number of households. If the target were to be achieved, it should therefore lead to an increase in the supply of homes per household, and in theory to a beneficial effect on affordability. But any beneficial impact on meeting the housing needs of both the current and the future population of London would depend on careful assessment of the nature and scale of those needs, and of the kinds of homes to be built, in terms of size, tenure and location.

As noted above, there are large variations in the rates of new household formation across London. We shall have to wait until the early summer before we see how the 88,000 new homes target has been allocated – following discussions between the GLA and the boroughs – across each of the 32 London boroughs. But if there is to be any relationship at all between the targets and the rates of new household formation, the allocations would have to be very different from the indicative figures for each borough published by the Government last year. For nearly all boroughs the Government’s indicative figures were higher than the projected number of new households. But the excess between the indicative target and the number of new households varies from inner London boroughs such as Newham (27%) and Greenwich (66%) to between 400% and 500% in outer London boroughs such as Richmond and Bromley. But in Tower Hamlets, the indicative target was 29% below the ONS projection of new households.

The decision to abandon the use of household projections as a key part of the standard method for determining housing targets was fully justified. As the ONS itself has said, ‘the projections are not a prediction or forecast of how many houses should be built in the future’. Nevertheless, the data discussed in this article indicates that the projections should continue to play a part in the detailed analysis of current and future housing needs at local level that should form the basis of the calculations on which housing targets are set for each London borough.

Michael Jubb, Chair