Bristol, Bath and Swindon need to grow. The three combined have long been targeted as key growth regions for housing in the South West, and the region has battled with an affordability crisis which has seen the average house price to wage ratio rise to a whopping 12:1.
And yet, that ratio may be about to grow. With regional spatial strategies being swept away, there are fears that nimbyism will outweigh social and economic necessity and severely curtail residential market growth.
Traditionally, the markets around Bristol, Bath and Swindon have suffered from undersupply, and during the recession, the number of completions and new-build sales have dwindled even further (see box).
These trends will be compounded by the government’s decision to abolish regional spatial strategies, which had set mandatory housebuilding targets for local authorities. The South West strategy was more than five years in the making and, popular or not, was subject to lengthy public consultation and in-depth research. It was still to be formally adopted after wrangles with the former government, but it set a regional target of an extra 592,460 homes by 2026 or 29,623 pa. For Bristol, the target was 36,500, Bath and North East Somerset 21,300 and Swindon 34,200.
Local electorate
After so much debate to get this far, developers, planners and agents have reacted furiously to the immediate end of the RSS. They argue that abolishing one framework without setting out another creates uncertainty in an already weak market, and places too much power in the hands of councils swayed by the nimbyist views of their local electorate. And their fears are proving well founded.
Bristol has confirmed that it will revert to its original target of 30,000 homes by 2026, and is pressing ahead with public consultation. It expects its core strategy to be complete by March 2011 and any planning decisions in the meantime will reflect its reduced target.
Swindon council is awaiting the government’s final legislation after the summer parliamentary recess before it makes any decisions. But it did confirm that it would assess planning applications on an individual basis. Bath and North East Somerset is understood to be following Bristol, and will revert to its original growth figure of 15,500.
Andrew Thomson, director of development and residential at BNP Paribas Real Estate, adds that, with significant reductions in public spending, the focus will be on private developers to meet targets. Yet many are already questioning whether they will significantly invest if the market is curtailed.
Greg Locke, divisional managing director at Galliford Try, says it is too early to make any decisions on the market. However, he adds that applications with local authorities have already become much more protracted, with the uncertainty over the planning process slowing down an already sluggish market. “It’s still too early to say how things are going to go, but underlying that, people will always want housing,” he says.
Many developers are also waiting to see the outcome of a legal challenge by CALA Homes in Winchester, where the Scottish firm has filed an application to challenge the government’s abolition of regional spatial strategies.
But, for now, the biggest impact is likely to come from the decisions of neighbouring local authorities, whose long-term growth in the direction of the cities would have expanded them. Simon Prescott, a partner at Barton Willmore, estimates that 30,000 fewer homes will now be built in the Bristol and Bath areas alone, with North Somerset and South Gloucestershire authorities both reducing their targets.
“There was a huge evidence base for the urban extension needed,” says Prescott. “The danger is that, as the economy recovers, there won’t be sufficient sites for development, and we’ll see spiralling house prices again that will impact on the lower end of the market.”
He adds that, without sufficient development, the economic competitiveness of the region will be undermined.
New-build figures show that the region is already failing to meet targets, and the hiatus caused by the end of RSS could put it even further behind, leading to concerns that developers will look elsewhere in the long term.
“The RSS figures suggested we needed to build around 30,000 homes a year, but we’ve not developed more than 18,000 a year since 2006,” says Richard Kitson, chair of the South West Housing Initiative, a pressure partnership of developers and employers. He says the issue now is whether there is sufficient land coming through from local authorities to encourage developers to build and get up to even the most basic of targets.
“Local authorities need to think through how they’re going to meet actual need, and may need to start working with adjoining councils.”
Bristol: new-build sales plummet
According to Savills, new-build sales in Bristol were down 60% between April and June compared with 2009, while enquiries and demand have increased. It estimates that, with so few development sites in the pipeline, completions will not reach peak levels again for at least six years.
In the rest of the residential market, poor mortgage availability is stymieing recovery and, beyond the city areas, just south Bath is back to peak prices. Across the rest of Bath and North East Somerset, prices are 2% below peak. Clifton is still 9% below, while Bristol city centre is 4% below. Savills warns that the market could stay the same for the foreseeable future.
