Rebecca Evans AM, Minister for Housing and Regeneration
Estimates of future housing need and demand are essential when developing plans and strategies at a national and regional level, and today I am able to announce new arrangements for calculating housing need in Wales.
Accurate and up to date estimates of housing need have an impact across Welsh Government policy areas. They are central to the formulation of future housing policy across my portfolio, but they also inform areas such as the National Development Framework (NDF), which is due to be published in 2020. Housing need also informs the assessments of local well-being required under the Well-being of Future Generations (Wales) Act.
The latest estimates of housing need in Wales were published by the Public Policy Institute for Wales in October 2015. Those estimates relied on household projections which are now out of date and therefore need to be revisited.
Understanding the need for additional housing is a complex and highly technical exercise, and different assessment mechanisms are currently in use in different parts of the UK. Welsh Government officials - including statisticians from the Government Statistical Service - have, at my request, conducted a review of current arrangements over recent months. We have worked closely with experienced practitioners from Welsh local authorities and the Welsh Local Government Association (WLGA). We have also gathered information about the approaches used to determine future housing need by the other UK Governments.
In light of the advice I have received as a result of this work, I have decided that the Welsh Government will adopt the housing need and demand tool developed by the Scottish Government. The tool will enable us to provide estimates of future housing need based on projections of newly forming households that will require additional housing units and existing unmet need. The overall estimate will be broken down by tenure using assumptions about future income, house and rent prices. As estimates of future housing need are formed using projections and assumptions we will publish a range of different scenarios.
The tool used in Scotland is well established, and in future this will be used to prepare estimates of housing need at both a national and regional level. We are grateful for the support we have received from Scotland throughout this work. As an immediate next step the tool will now be adapted, through collaboration between Welsh and Scottish officials, to meet Welsh requirements.
I am anxious that this important source of data should be available to inform the wider debate surrounding housing in Wales. In future, therefore, the estimates of ‘housing need’ will be published as official statistics and will adhere to the Code of Practice for Statistics. I expect the first estimates at a Wales and regional level to be published in the first quarter of 2019. Methodological decisions will be taken by Welsh Government statisticians with the support of an external stakeholder group which will include experts from local government.
It is important to note that these official estimates of housing need and demand should not be interpreted as a target for the number of new homes required to be built in Wales. Rather, what these estimates provide is evidence to inform the development of local or national targets which also need to take account of national, regional and local policy and practical considerations to reach a view on the level of housing that can actually be delivered within an area.
Members will be aware that housing need has also been identified as a priority work stream by the independent panel undertaking the Review of Affordable Housing Supply. The estimates of future housing need will be available to be used alongside the findings of the Review of Affordable Housing to develop future housing policy and proposals.
I do not have any immediate plans to change the requirements surrounding Local Housing Market Assessments which are developed by local authorities to determine local housing requirements. I have, today, written to local authorities to advise them that they should continue with this work. I intend to review this decision in line with any recommendations coming from the Review of Affordable Housing Supply and as the new method of estimating future housing need, at a national and regional level, beds in.
I am pleased that we have identified a robust methodology for estimating future housing need and demand in Wales. This is an important area of work which supports our ambition to deliver 20,000 homes during this term of government. Crucially, it is also an important building block paving the way for us to work with our housing partners to develop an even longer term perspective on the continuing challenge to build more and better homes firmly based on the best possible estimates of future need.