10 October: Failure to plan for second homes will hit first-time buyers, says new report

National Housing and Planning Advice Unit

Housing affordability body urges planning authorities to take wider view

Regional planning authorities must acknowledge the impact of second home ownership on the housing market and factor it in to their development of regional spatial strategies - or risk creating a further undersupply of homes in the future.

The warning comes from the National Housing and Planning Advice Unit (NHPAU), the independent body set up to advise all levels of government on housing supply and affordability, as it launches a new report into the second homes market.

The report(1) analyses the existing research evidence available about the impact of second homes on the private housing market, where there are gaps and whether assumptions held by some - that the growth of second homes has contributed to increasing house prices - are backed by the facts.

"The topic of second homes is one of considerable debate and controversy. But while this is an area that generates a great deal of heat, robust evidence about the social, economic and environmental consequences of second homes is actually limited," says Professor Glen Bramley, NHPAU board member and author of the report's foreword.

"While it is easy to see why Regional Planning Authorities aren't allowing for second homes in their housing strategies, this needs to change.

"A lack of planning for second homes does not deter purchase. There is no national law or policy that discourages second home ownership, and nor are they likely, given the localised nature of the problem. So a failure to plan for second homes actually ends up biting on first-time buyers and those at the margins of home ownership in certain areas because of the impact of further undersupply in the market."

The report forms part of an ongoing series of research studies produced by the NHPAU, to help raise awareness among stakeholders to counter the country's continuing housing affordability problem. It suggests that as the existing population gets richer and working patterns change the demand for second homes will continue. Independent forecasts suggest that the number of second homes is likely to grow, with some analysts predicting an increase of more than 70,000 by 2015.

The Unit will discuss the report with regional partners as they begin to finalise plans for the next round of housing reviews.

For further information contact Graeme Buck/Tom Pienaar, Camargue, tel 020 7636 7366.

Notes to editors

About the NHPAU

The NHPAU is an independent body that has been set up to help make homes more affordable across England. It is made up of some of the country's leading economists who provide expert guidance to regional and national bodies to ensure we deliver the right number of homes, of the right type, in the right place and at the right time.

Since April 2007, planners and government have to consider affordability when deciding future housing supply. The job of the NHPAU is to tell them how they might achieve this and make a positive impact on housing affordability in England.

The Unit is chaired by Professor Stephen Nickell, CBE, FBA a former member of the Bank of England Monetary Policy Committee. He is currently Warden of Nuffield College Oxford and non-executive member of the new Statistics Authority.

The Unit is delivering a new research programme as a resource for regional partners and others on housing market affordability. It is also developing a toolkit to allow forward-looking economic and statistical analysis of the impact of planned housing provision.

Why the NHPAU was created

1. Economist Kate Barker's Review of Housing Supply in 2004 identified that the demand for housing is outpacing supply, and this is pushing up prices.

2. The Government wants to make housing more affordable across the country. What this means is building enough new homes, in the right places, to meet demand.

3. Between 1997 and 2007 average earnings increased by 45 per cent (Source: ASHE, ONS) while the average house price increased by 171 per cent (Source: Communities and Local Government from Land Registry Data). The ratio of lower quartile house prices to earnings doubled in the same period.

4. Barker's review produced a series of recommendations about improving the supply of housing in England. This included the creation of a body to provide expert advice on housing matters, particularly affordability. The NHPAU is the result.

Professor Glen Bramley

Professor Bramley is an NHPAU board member with specific responsibility for the South West and North East regions. He has been Professor of Housing and Planning/Urban Studies at Heriot - Watt University in Edinburgh since 1994 leading research on planning, housing and urban policy. Prior to this he lectured in Urban Studies at the University of Bristol from 1976 to 1993 specialising in local government finance, housing and economic aspects of public policy. He has published papers and conducted extensive research analysing the economics around housing affordability and the relationship it has with planning and house building.

End notes

(1) Rapid Evidence Assessment of the Research Literature on the Purchase and Use of Second Homes, led by Professor Michael Oxley of the Centre for Comparative Housing Research at Leicester Business School, De Montfort University, 2008.