Memorandum by the City of Sunderland (AH
102)
The City of Sunderland would like to offer a
response with regards to the following issues:
— The potential benefits of and scope
to promote greater homeownership.
— The extent to which home purchase
tackles social and economic inequalities and reduces poverty.
— The economic and social impact of
current house prices.
— The relationship between house prices
and housing supply.
— Other factors influencing the affordability
of housing for sale including construction methods and fiscal
measures.
— The scale of the Government's plans
to boost housing supply.
— The relative importance of increasing
the supply of private housing as opposed to subsidised housing.
— How the planning system should respond
to the demand for housing for sale.
— The scale of housing development
required to influence house prices and the impact of promoting
such a programme on the natural and historical environment and
infrastructure provision.
— The regional disparities in the supply
and demand for housing and how they might be tackled.
1. BACKGROUND
The City of Sunderland is the industrial capital
of the North East of England and has an overall population of
280,807 (2001 Census data returns) 0.48% of the entire population
of Great Britain.
Sunderland is based upon its shipbuilding and
heavy industry past as well as coalmining and port trade. Although
the focus continues to be on heavy and light engineering the principal
industries now revolve around car assembly, car components and
a growing call-centre industry.
In relation to the North East region the City
has the largest population concentration and this is centred around
the City centre, Washington New Town and the former coalfield
areas of Houghton and Hetton.
The City is the largest, in terms of population,
between Leeds and Edinburgh, and covers an area of 137 sq km and
lies on the North East coast of England.
Deprivation in Sunderland is broad based, affects
the whole of the City and is not restricted to locality pockets
within the City. The city is 15th out of 354 authorities in the
governments index of multiple deprivation and 11 out of 25 wards
are among the top 10% most deprived in the country.
Between 1997 and 2005 over 9,000 units of previously
council owned social housing has been demolished or lost through
right to buy sales. In relation to the social rented as a whole,
the sector as at 31 March 2005 had 35,884 properties available
in the City. Sunderland Housing Group, the largest RSL in the
City, which took over the management of the Council's stock has
seen a decrease in stock total from 40,750 units in 1997, 36,356
as at the point of transfer in March 2001 to only 31,534 on 1
April 2005.
Population changes
Sunderland's current population is 280,807 and
is declining by 3,500 per annum and fell by 15,100 from 1991 to
2001.Although this is the case, the average household size is
also decreasing due to more people choosing to live alone and
a reduced birth rate. In 1981 household size was 2.80 with 105,434
households, in 1991 it was 2.50 with 113,904 households and in
2001 it was 2.36 with 116,355 households. Also it is predicted
that by 2011 it will be 2.15 with 121,816 households.
Key statistics
— Older people aged 65+ account for
43,776 or 15.6% of the population.
— A significant trend for the City
is the projected increase in the number of people over the age
of 65, by 2006 it is estimated that this number will grow to 46,470,
with predominance in the over 75 age group.
— The Black and Minority Ethnic Communities
accounted for 1.9% of the population in 2001, and accounted for
approximately 5,300 residents but Sunderland has a small but growing
proportion of residents from BME communities.
— Unemployment stands at 3.7% where-as
the national average is 2.6%.
— The health of the City's population
is well below that of the national average as is educational attainment.
Affordable housing
House prices in Sunderland have increased significantly
over the past five years due to, the ripple effect of increased
house prices emanating from the South, increased investor buying
and low interest rates. These overriding factors have highlighted
the issue of affordable housing supply.
Although "Affordable Housing" is now
a well known and well used phase, there is not one definitive
definition of what constitutes affordable housing.
For the purpose of this paper Affordable Housing
is "housing which is affordable as the purchase costs
are achievable and maintainable to the purchaser. This does not
necessary mean that the costs associated with the purchase are
subsidized in any way".
2. CURRENT HOUSING
SITUATION
There are currently 119,000 households within
the City, with a tenure breakdown of 63% owner occupation, 34%
social rented and around 3% private rented sector.
Homeless applications increased significantly
during the past five years which the table below illustrates.
This trend highlights a lack of available properties as more households
are applying as homeless.
| July to
Sept 2001
| July to
Sept 2002 | July to
Sept 2003
| July to
Sept 2004 | July to
Sept 2005
|
Decisions | 353 |
359 | 733 | 607 |
454 |
| All homelessness, including intentionally and non-priority need
| 266 | 281 | 517
| 363 | 355 |
| Acceptances | 159 | 163
| 255 | 154 | 145
|
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Sunderland is going through a period of change. The previous
perception of low demand coupled to low value and abandonment
no longer prevails and the real issue is of property availability
and whether people can access and move through the property ladder,
(either via purchase or rent) allowing properties to be released
for others, ie those in need.
At present the rate of new build to demolition exasperates
the supply and demand of properties in the City as demand outstrips
supply mainly as a result of demolition and the time lag factor
in building new developments. When this phase of regeneration
is complete, more properties should become available in all tenures.
Also the social rented sector has seen just over a 9,000
property reduction since 1997 and this will have undoubtedly affected
the supply of housing in the City due to such a significant and
sustained reduction over the years.
These two issues have dramatically affected housing supply
in the city, meaning that there is not the correct supply of housing
across the city.
It is the affordability of the market that has to be addressed
from the private sector with a significant build programme in
the social rented sector as to alleviate pressures on supply and
demand.
3. BENEFITS OF
HOME OWNERSHIP/TACKLING
SOCIAL INEQUALITIES
Areas with a higher percentage of home ownership generally
prove to be more sustainable and popular than areas with a low
percentage of homeownership. This can be in part attributed to
increased economic equality and low incidents of anti-social behaviour
and crime.
Pushing people into ownership when their financial resources
are only on the cusp of affordability may not be a wise move.
Home ownership is a serious responsibility and one which can often
incur unforeseen costs, for maintenance etc. If this were the
case, households could be forced to live in increased poverty.
As many applicants on Sunderland's housing waiting list cannot
secure finances to purchase or can "only just" secure
finances, we believe that the push for new housing has to be focused
on providing high quality housing with excellent management across
all tenures and not purely based upon greater home ownership.
4. HOUSE PRICES,
HOUSING SUPPLY
AND INCOME
LEVELS
There has long being the argument that the housing market
will essentially "look after itself" in that if properties
become unaffordable people will not be able to purchase them and
allow the market to function. Therefore the supply/demand argument
kicks in:
Properties are unaffordable, leading to a stagnant market
with an over supply of properties, leading to sellers reducing
prices in order to sell. Although the overall growth is vast,
evidence now shows that this shift in values has started in the
city. The table below illustrates this.
| 2001-02
| 2002-03 | 2003-04
| 2004-05 | 2005-06
| Overall
Growth |
Average Property Price % Increase across the Year
| 15.1% | 17.9% | 25.4%
| 20.8% | 3.2% | 112.2%
|
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|
As demonstrated by the breakdown of properties in the various
Council Tax bands. In Sunderland there is a predominance of properties
in Council tax bands A and B, 96,685 properties which is 78.1%
of the total, whereas there are only 0.6% in bands G and H 637
properties. Therefore it is clear that the city has a large amount
of properties at the "lower cost" end of the market.
The questions still remains, are these properties affordable?
If you examine the affordability of average properties set against
average income, there are certain groups which may find it difficult
of afford a suitable property.
The actual house prices in Sunderland at September 2005 are
on average:
Detached | £207,990
| Semi Detached | £122,806
|
| Flat/Masionette | £90,119
| Terraced | £94,479 |
| Average Property | £117,008
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In Sunderland the average annual full time wage is £17,939,
which is approximately £4,500 less than the English average
and £1,500 below the North East average. Compared with the
average property price in Sunderland in September 2005 is approximately
£117,008. This would mean a house price to property ratio
of 6.5.
The following are House Price Ratios in Sunderland.
2 person
household—both
full time
| 2 person
household—male
full time and
female part time
| 1 person
household—
male full time
| 1 person
household—
female full time
| 1 person
household—
female part time
|
3.2 | 4.3 | 5.9
| 7.0 | 15.5 |
| |
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Most mortgage lenders generally lend households 3 to 4 times
their annual wage, the consequence of this being that any ratio
over four could be classed as unaffordable. Highlighting the fact
that the prosperity of residents has a significant impact on the
ability to secure a mortgage as to get onto, or move up the homeownership
ladder.
The City has relatively high unemployment and low home ownership.
On average unemployment is 4.8%, which is above the national average
of 2.6% and homeownership 63%, which is below the national average
of 68.7%. However in South Sunderland home ownership is as low
as 35% and unemployment as high as 8%. This shows a direct correlation
between the two factors, and highlights the fact that pockets
of extreme deprivation exist.
As all housing markets across the sub-region and beyond have
increased it is not the case that people are leaving the city
to secure cheaper accommodation. It is in fact the opposite, people
have moved to the city, as properties in the city are more affordable
than the neighbouring Local Authorities. In a survey people highlighted
that it was the lack of jobs, higher value property and properties
in "nice environments" that made them migrate from the
City to other areas, and housing choice has to reflect that high
earners are leaving the City in order to fulfill their housing
desires.
Examination of the Councils housing register shows that the
vast amount of applicants, who require re-housing are reliant
on welfare benefit as their sole income. This factor alone excludes
these people from home ownership and increases demand for high
quality social and privately rented properties.
The key is an increase in the availability of houses in all
tenures and locations whilst ensuring that affordability is not
yet another barrier to securing suitable accommodation to those
that have the means to secure a mortgage and wish to buy.
Keyworkers
If you examine the previous average earnings table it is
very clear that keyworkers will be able to secure a property within
the city. Also there is no evidence to suggest otherwise. Therefore
providing specific properties for this group is deemed as unnecessary
at present.
5. ECONOMIC IMPACT
AND HOUSE
PRICES
The recent sudden growth in property prices has had both
a social and economic impact upon the city and its residents.
The main effect being the reduction in the number of households
who cannot afford to comfortably purchase a property. It has also
created a higher demand for rented properties, especially from
registered social landlords, (which could however provide an avenue
into homeownership via right to buy legislation).
The table shows that the number of people requesting a property
between 1998 and 2001 more than doubled.
| Year | 1997-98 |
1998-99 | 1999-2000
| 2000-01 | 2001-02
| 2002-03 | 2003-04
| 2004-05 |
| Properties Allocated | 5,892 |
5,191 | 5,106 | 5,277
| 4,557 | 3,896 | 1,882
| 1,308 |
| People on the Waiting List | 2,003
| 3,743 | 4,476 | 5,156
| Comparable figures are unavailable due to the introduction of CBL
|
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This trend is evident throughout the sub-region. The chart
below shows that since 1999 the housing registers within Tyne
and Wear have almost trebled, from 26,508 households in 2001 to
over 62,304 in April 2004.
Another concern for the city, which stems from market movement
is the increased amount of investor buyer from people who live
outside the city and northeast region. This is especially common
in the new-build apartment market. The trend has contributed to
pushing up purchase prices and prevented more local people from
buying such properties.
6. GOVERNMENT PLANS
TO INCREASE
SUPPLY
It is the view of northern-based authorities that Central
Government thinking is focused on the south and its housing problems.
It is true that the south does has exaggerated housing stress,
generally linked to the lack of supply and high prices. However
as described the north suffers some serious housing issues and
these should continue to be targeted by central government, via
programmes such as Pathfinders, New Deal for Communities, Urban
Regeneration Companies and new options for Council owned housing
stock. The Northern Way highlights these methods as part of an
overall package to deliver decent homes in all housing tenures.
This move to tackle decline within the private sector and poor
quality housing owned by Councils is the first step to delivering
sustainable communities in all housing sectors and areas of the
north.
Housing issues are only part of the issue. There is reason
that the southern housing market is so buoyant, and this is, in
part based on a powerful economy and the link to Europe. Central
government should be looking towards boosting the economy of the
city and the northeast region to support plans for delivering
sustainable housing developments.
7. IMPORTANCE OF
PRIVATE/SUBSIDISED
HOUSING
In Sunderland it is not the scale of private housing development,
but the overall net increase in the housing stock in all tenures
which is critical to ensuring a well balanced, flexible housing
market. The latest Sunderland Housing Strategy, (2006-09) will
clearly state one of its key aims is that of improved choice of
type, location and price to meet 21st Century aspirations and
demands, which will reverse the trend of outward migration.
Sunderland is steadfast in its belief that both private housing
and subsidised housing is of paramount importance in delivering
the Government's vision of sustainable communities in the 21st
Century. This is demonstrated as the Council supported, where
appropriate, bids for National Affordable Housing Programme funding
from the Housing Corporation and was very much in support of RSL
schemes which delivered cross-tenure developments and affordability
tools, such as shared ownership properties.
It has also been agreed that the Council will make land available
for more "higher" value housing, although this does
not link directly with affordable housing supply it does tackle
the shortage in supply of that particular type of property, and
should free up more affordable properties down the property ladder.
8. PLANNING SYSTEM
An option for Sunderland in the future is the use of Section
106 contributions by private developers, especially in areas where
there is an identified need for developers to aid suitable housing
provision, ie a percentage of the development being socially rented
housing.
Planning officers have recently completed and published the
Interim Strategy for Housing Land. This details where developments
such be by identifying land for use and the numbers of units required.
This provides the council, house builders, RSL's and other organisations
with a framework for delivering new housing throughout the city.
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