Aberdeen City and Shire

Housing Need and Demand Assessment

June 2010

Table of Contents
1. Introduction.............................................................................................1 Background and Purpose.............................................................................1 Context.........................................................................................................2 Strategic Housing Market Partnership..........................................................3 Housing Market Areas..................................................................................5 Structure of the Housing Needs and Demand Assessment .........................6 Study methods .............................................................................................8 2. Demographic and Economic Context .................................................10 Recent Demographic Trends......................................................................10 Recent Household Trends..........................................................................21 Recent Economic Trends ...........................................................................24 Demographic and Economic Context: Summary and Key Issues ..............40 3. The Current Housing Market................................................................42 Housing Stock ............................................................................................42 Housing Market Activity..............................................................................62 Bringing the Evidence Together .................................................................86 4. Future Housing Market.........................................................................90 Household Forecasts .................................................................................94 Future Economic Performance...................................................................98 Future Affordability ...................................................................................107 Future Population and Households Bringing the Evidence together ........109 5. Housing Requirements of Specific Household Groups ..................111 Introduction ..............................................................................................111 Older People ............................................................................................112 Physical Disability.....................................................................................119 Learning Disability ....................................................................................122 People with mental health or substance misuse.......................................126 Families and Lone Parents.......................................................................127 Ethnic Minorities .......................................................................................130 EU Migrants..............................................................................................134 Gypsies/ Travellers...................................................................................135 Other Travelling People............................................................................136

Students ...................................................................................................136 Homeless Households .............................................................................138 Lesbian, Gay, Bisexual and Transgender Households (LGBT) ................143 Bringing the evidence together.................................................................144 6. Central Estimate of Net Annual Need ...............................................147 Introduction ..............................................................................................147 Summary description of model for assessing net annual housing need...148 Current (backlog) housing need ...............................................................150 Emerging (or future) need ........................................................................157 Summary of emerging need .....................................................................170 Projecting housing supply ........................................................................171 Central estimate of net annual housing need ...........................................176 Comparison with Bramley needs estimates .............................................178 Sensitivity analysis and the possible range of needs estimates ...............182 Summary and emerging issues ................................................................185 7. Joining Up Across the Assessment..................................................187 How does anticipated population and household growth compare with the partnerships views on economic and population growth? .......................187 How does the net annual need figure compare to the net annual housing requirement? ............................................................................................188 How do the HMA based housing need estimates translate into housing supply targets and housing land allocations at local authority level?........190 Is there evidence of imbalance in the housing system and what policy options, if any, may be required to correct this? .......................................191 What is the scope for a mix in the range of tenures, including private rented sector, to assist in meeting identified need and demand?........................193 What are the needs of specific population sub-groups and what policy options are available to address these specific concerns?.......................194 8. Monitoring and updating the assessment ........................................198 Background ..............................................................................................198 Monitoring the Assessment ......................................................................198 Updating the Assessment ........................................................................198 Glossary .....................................................................................................200 Acronyms ...................................................................................................204

Appendix 1: Strategic Housing Market Partnership Meeting Notes and Minutes .......................................................................................................205 Appendix 2: Housing Market Areas..........................................................206 Appendix 3: Home Buyers Survey Methodology ....................................210 Appendix 4: Demographic, Household and Economic Context ............216 Appendix 5: The Current Housing Market ...............................................221 Appendix 6: Future Housing Market ........................................................228 Appendix 7: Demographic, Household and Economic Context ............230 Appendix 8: Housing Register Data and Assessing Need .....................231 Appendix 9 Monitoring and Update Framework......................................260

Tables
Table 1.1: Core Outputs.............................................................................................. 2 Table 1.2: Process Checklist....................................................................................... 2 Table 1.3: Meetings of the Strategic Housing Market Partnership.............................. 4 Table 1.4: Structure of Housing Need and Demand Assessment............................... 6 Table 2.1: Population estimates (1998-2008) ........................................................... 10 Table 2.2: Population structure, 1998-2008 (Percentages) ...................................... 12 Table 2.3: Age breakdown of adults aged 16 to 24 years in Aberdeen City, 2008 ... 13 Table 2.4: In, out and net migration 2006/07 and 2007/8 combined......................... 16 Table 2.5: Ethnic groups in Aberdeen City and Shire, 2001 ..................................... 20 Table 2.6: Households in Aberdeen City and Shire, 2003-2008 ............................... 21 Table 2.7: Composition of households in Aberdeen City and Shire Area, 2001 ....... 22 Table 2.8: Composition of households in Aberdeen City and Shire, 2008................ 23 Table 2.9: Estimated tenure of households in Aberdeen City and Shire................... 23 Table 2.10: Working Age Population by Housing Market Area, 2008 ....................... 29 Table 2.11: Residence based analysis of changes in gross weekly earnings 2002-9 .......................................................................................................................... 32 Table 2.12: Workplace based analysis of changes in gross weekly earnings 2002-9 .......................................................................................................................... 32 Table 2.13: Net Annual Household Income, 2004/5 and 2005/6 .............................. 33 Table 2.14: Net Annual Household Income by Tenure in Aberdeen City and Shire, 2004/5 and 2005/6 ............................................................................................ 34 Table 2.15: Numbers and percent that are amongst the 20% most deprived in Scotland ............................................................................................................ 37 Table 2.16: Housing Benefit recipients, Aberdeen City & Aberdeenshire May 2009 40 Table 3.1: Total dwellings in Aberdeen, Aberdeenshire and Scotland, 2008............ 43 Table 3.2: Numbers of dwellings in Aberdeen City and Shire (2001-2007)25 ............ 43 Table 3.3: Vacant dwellings in Aberdeen City and Shire (2001 2008)................... 44 Table 3.4: New build completion rates (1997 2009)............................................... 45 Table 3.5: Tenure of households (2001) ................................................................... 48 Table 3.6: Tenure of Households, 2005/06............................................................... 49 Table 3.7: Private Landlord Registration................................................................... 49 Table 3.8: Dwelling age as a percentage of total stock............................................. 49 Table 3.9: Dwelling Size, 2008.................................................................................. 50 Table 3.10: Property Type (Households), 2001 ........................................................ 51 Table 3.11: Dwellings type 2008 ............................................................................... 51 Table 3.12: Local Authority Housing Stock ............................................................... 52 Table 3.13: Total sales for LA and Scottish Homes stock......................................... 52 Table 3.14: House Size in the Social Rented Sector ................................................ 53 Table 3.15: RSL Total Number of Units .................................................................... 54 Table 3.16: RSL New Build Completions .................................................................. 54 Table 3.17: SHQS Flag ............................................................................................. 56 Table 3.18: SHQS Targets For Social Housing Stock .............................................. 57 Table 3.19: Disrepair................................................................................................. 57 Table 3.20: National Home Energy Rating................................................................ 58 Table 3.21: Percentage of Households in Fuel Poverty............................................ 59 Table 3.22: Aberdeenshire HMO by number of occupants ....................................... 60 Table 3.23: Aberdeen City HMO by number of occupants........................................ 60 Table 3.24: Overcrowding ......................................................................................... 61 Table 3.25: Under Occupied Households ................................................................. 61 Table 3.26 Sales per 1,000 households (2008) ........................................................ 63 Table 3.27: Total Sales ............................................................................................. 65 Table 3.28: New Build Sales ..................................................................................... 67

Table 3.29: Sasines Resale House Prices, 2002 - 2008........................................... 69 Table 3.30: Average monthly market rents, Aberdeen City ...................................... 73 Table 3.31: LHA Limits.............................................................................................. 74 Table 3.32: Rural HMA Rental Costs ........................................................................ 74 Table 3.33; Aberdeen HMA house price to earnings ratios ...................................... 77 Table 3.34: Rural HMA house price to earnings ratios ............................................. 78 Table 3.35: House Price to Earnings ........................................................................ 79 Table 3.36: Monthly Cost of Property for First Time Buyer ....................................... 82 Table 3.37: Reasons for Moving ............................................................................... 82 Table 3.38: Impact of Financial Crisis on house buying decision making................. 83 Table 3.39: Reasons for Choosing and Area ............................................................ 83 Table 3.40: Relets ..................................................................................................... 84 Table 3.41: Local Authority Housing Turnover (%) ................................................... 84 Table 3.42: Housing Lists.......................................................................................... 85 Table 3.43: Waiting Lists : Re-let Ratio..................................................................... 86 Table 4.1: Population Forecasts ............................................................................... 91 Table 4.2: Population Forecasts by Age Group ........................................................ 93 Table 4.3: Household Forecasts ............................................................................... 94 Table 4.4: Age Structure of Heads of Households.................................................... 95 Table 4.5: Projected percentage change of households of each type, between 2006 and 2031 ........................................................................................................... 96 Table 4.6: UK Economic Forecasts to 2011............................................................ 102 Table 4.7: Forecasts for Scottish Economic Growth ............................................... 103 Table 4.8: Unemployment Forecasts for Scotland .................................................. 103 Table 4.9: Aberdeenshire Growth Forecast ............................................................ 103 Table 4.10: Aberdeen City Growth Forecast........................................................... 103 Table 4.11: Average Annual Housing Requirements 2006 - 2031.......................... 109 Table 4.12: Housing Requirement High Growth Scenario ...................................... 110 Table 5.1: Numbers older people, 2006-2031 and prevalence of dementia ........... 112 Table 5.2: Number of Care Home places per 1000 population aged 65+, March 2008 ........................................................................................................................ 116 Table 5.3: Social Rented Housing Units for Older People, March 2009 ................. 117 Table 5.4: Prevalence estimates of people aged 16-59 years with physical disabilities, 2006-2031 .................................................................................... 120 Table 5.5: Housing Tenure for households that had a long standing illness, health problem or disability ........................................................................................ 121 Table 5.6: Housing provision specifically for those with disabilities by public authorities and housing associations as at March 2009.................................. 121 Table 5.7: Prevalence estimates for people with learning disabilities ..................... 123 Table 5.8: Care Homes for Adults with Learning Disabilities; Beds, Homes and Residents; by sector and Local Authority, March 2006 ................................... 125 Table 5.9: Tenure by household composition ......................................................... 128 Table 5.10: Families and Lone Parents defined as overcrowded by tenure ........... 129 Table 5.11: Ethnic Minorities as proportion of population by age band .................. 131 Table 5.12: Ethnic Minority Households, 1991 and 2001........................................ 132 Table 5.13: Housing Tenure of Ethnic Minority Households, 1991 and 2001 ......... 132 Table 5.14: Number of applicants by ethnicity and bedrooms required as at 31/03/09 ........................................................................................................................ 133 Table 5.15: A8 & A2 Council Housing Register Applicants as at 31 March 2007-09 ........................................................................................................................ 134 Table 5.16: A8 and A2 applicants housed 2006/07 to 2008/09 .............................. 135 Table 5.17: Estimated Population of Gypsies/Travellers in Aberdeen City and Shire by Local Authority and Type of Site, July 2008. .............................................. 135 Table 5.18: Number of Pitches provided by Site Type, 2008.................................. 136 Table 5.19: Students by institution .......................................................................... 137

Table 5.20: Existing Student Accommodation ........................................................ 137 Table 5.21: Other Student Accommodation ............................................................ 138 Table 5.22: All Homeless Applicants by Age .......................................................... 141 Table 5.23: Number of 16 or 17 year olds ceasing to be looked after .................... 142 Table 5.24: Projected Numbers of Young People Leaving Care in Aberdeen City and Aberdeenshire................................................................................................. 142 Table 6.1: Summary description of the Scottish Government recommended approach ........................................................................................................................ 147 Table 6.2: Housing Register data used to inform needs assessment..................... 150 Table 6.3: Incidence of backlog need ..................................................................... 151 Table 6.4: Numbers of household in current (backlog) need .................................. 152 Table 6.5: Percent households in need by HMA, tenure and household type ........ 157 Table 6.6: Alternative estimates of gross household formation rate(GHF) ............. 158 Table 6.7: Projected annual average number of new households, 2009-2018....... 160 Table 6.8: Estimated annual number of new households that cannot afford to access market priced housing, 2009-2018 inclusive .................................................. 165 Table 6.9: Annual allowance for existing households falling into need ................... 169 Table 6.10: Consolidated central estimate of emerging need................................. 170 Table 6.11: Programmed social rented new social rented build programme .......... 171 Table 6.12: HMA level social rented stock projections 2009-18 ............................. 172 Table 6.13: Local authority level social rented stock projections 2009-18 .............. 173 Table 6.14: Projected social housing supply in Aberdeen to 2018 ......................... 175 Table 6.15: Projected social housing supply in Aberdeenshire to 2018.................. 175 Table 6.16: Projected social housing supply in Aberdeen HMA to 2018 ................ 175 Table 6.17: Projected social housing supply in Rural HMA to 2018 ....................... 176 Table 6.18: Estimate of net annual need 2009 to 2018 .......................................... 176 Table 6.19: Alternative net annual housing need estimates ................................... 178 Table 6.20: Estimate of new households in need that could afford LIFT option ..... 180 Table 6.21: Alternative estimates of net annual housing need ............................... 184 Table 7.1: Housing Requirement High Growth Scenario ........................................ 188 Table 7.2: Housing need compared to housing requirements ................................ 189 Table 7.3: Translating HMA need estimates into local authority target................... 190 Table 7.4: Housing allowances by HMA and local authority ................................... 191 Table 7.5: Particular need support options ............................................................. 195 Table 8.1: Current monitoring arrangements .......................................................... 198 Table 8.2: Key data sources for the 2011 update ................................................... 199

Figures
Figure 2.1: Annual change in Aberdeen City and Shire population 1998 to 2008 11 Figure 2.2: Number of Students in Institutes of Higher Education 1997 - 2008 14 Figure 2.3: Net migration, Aberdeen City & Shire, 1996 2008 15 Figure 2.4: Number of people moving to Aberdeen City and Aberdeenshire from the other area, 2001/2 to 2007/8 17 Figure 2.5 National Insurance Registrations to Migrant Workers 18 Figure 2.6: Economic Activity rate adults of working age 2001/2 -2008/9 25 Figure 2.7: Employment rate amongst those of working age, 2001/2 to 2008/9 25 Figure 2.8: Brent Crude Oil Price (January 2000 March 2010) 26 Figure 2.9: Employee share by industry in 2007 28 Figure 2.10: Unemployment Rates, 2004-9 30 Figure 2.11: Claimant Count Unemployment January 2006 January 2010 31 Figure 2.12: Gross Household Income Distribution for Aberdeen City & Shire, 200835 Figure 2.13: Median Income at Intermediate Data Zone Level 36 Figure 2.14: SIMD Aberdeen City and Shire Quintiles 37 Figure 2.15: SIMD (2009) Rural HMA Areas in 20% Most Deprived 38 Figure 2.16: SIMD (2009) ABERDEEN HMA Areas in 20% Most Deprived 38 Figure 2.17: Percentage of working age persons in receipt of key out of work benefits, 2000-9 39 Figure 3.1: Housing completions (1997 2008) 46 Figure 3.2: Total Number of open Market House Sales 63 Figure 3.3: Average Price, Aberdeen, Scotland and UK 70 Figure 3.4: Resale Lower Quartile House Prices 71 Figure 3.5: Trends in Scottish Rents 73 Figure 3.6: Bank of England Base Rates, (March 1999-march 2010) 76 Figure 3.7 Affordability 2008 80 Figure 4.1: Aberdeen HMA projected percentage change of households type 97 Figure 4.2: Rural HMA projected percentage change of households type 97 Figure 4.3: Scottish and UK GDP Growth (Quarter-on-Quarter) 98 Figure 4.4: Scottish and UK ILO Unemployment Rate 99 Figure 4.5: Claimant Count Rate proportions in Aberdeen City and Aberdeenshire (Jan 2007 to Dec 2009) 100 Figure 4.6: Percentage Change in Employee Jobs in Scotland, June 2008 to June 2009 102 Figure 4.7: GVA growth 1981 to 2019 105 Figure 4.8: Employment Growth 1981 to 2019 106 Figure 5.1: Living Arrangements of Older People in Aberdeen City & Shire 2001 116 Figure 5.2: Household Tenure of Working Age Population (16-59) and Older People in Aberdeen City and Shire 116 Figure 5.3: Waiting List Applicants seeking sheltered housing, 118 Figure 5.4: Wheelchair applicants 122 Figure 5.5: Percentage of Adults with Learning Disabilities living in their own tenancies, 124 Figure 5.6: Number of Homeless applicants as percent of number of applications made in 1998/99 139 Figure 6.1: Profile of households in current need by tenure 155 Figure 6.2: Households in current need by household type 156 Figure 6.3: Distribution of net income for all households and households aged 16-34 years living in the Aberdeen City and Shire area 161 Figure 7.1: Strategic Growth Areas 192

1.

Introduction

Background and Purpose 1.1 The Scottish Government requires that development plans and local housing strategies are informed by the preparation of a housing need and demand assessment. Scottish Planning Policy (2010) sees this integrated approach to assessment as enabling closer alignment between the preparation of development plans and local housing strategies (LHS). 1.2 In March 2008 the Scottish Government issued Housing Need and Demand Assessment Guidance that set out the approach local authorities and their partners should follow to develop a good understanding of how housing markets operate. 1.3 This is the first housing need and demand assessment prepared for the Aberdeen City and Shire area. It employs the recommended approach to analysing the housing market and assessing future housing need and demand over the next 10 years and beyond. While all of these issues have previously been considered in policy and strategy development, this has not previously been done in an integrated assessment. 1.4 This report will therefore provide an evidence base that both local authorities and their partners can use to inform policy discussions and decisions in relation to both market and affordable housing. 1.5 Scottish Planning Policy (2010) states that, where an assessment is considered robust and credible by the Scottish Government (Centre for Housing Market Analysis), the approach used will not normally be considered at the development plan examination. Instead, the examination will focus upon the proposed development plan and its relationship with the findings of the assessment. 1.6 For an assessment to be considered robust and credible it, as a minimum, must provide the core outputs and adhere to the process criteria set out in Table 1.1 and 1.2 below. 1.7 In this report the term housing requirement refers to the volume of housing supply necessary to meet housing demand and need. Demand refers to the quantity, type, size and quality of housing that households are willing and able to purchase or rent. Need refers to households that lack their own housing or live in unsuitable housing and who cannot afford to secure more suitable housing in the housing market without some assistance.

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Table 1.1: Core Outputs

1 2 Estimates of current dwellings in terms of size, type, condition, tenure, occupancy and location. Analysis of past and current housing market trends, including balance between supply and demand in different housing sectors and price/affordability. Description of key drivers underpinning the housing market. Estimate of total future number of households. Estimate of household groups who have specific housing requirements e.g. families, older people, minority ethnic groups, disabled people, young people, etc. Estimate of current number of households in housing need. Estimate of future households that will require affordable housing. Estimate of future households requiring market housing. Estimate of total future households requiring either affordable or market housing.

3 4 5 6 7 8

Source: Scottish Government (2008)

Table 1.2: Process Checklist

1 2 3 4 5 Approach to identifying housing market area(s) is consistent with accepted approaches to identifying housing market areas. Housing market conditions are assessed within the context of the housing market area and any component markets contained within it. Involves key stakeholders. Contains a full technical explanation of the methods employed, with any limitations noted. Assumptions, judgements and findings are fully justified and presented in an open and transparent manner, in particular in relation to economic growth, demographic change and migration, income estimates and translation of the assessment of need and demand at housing market area level into housing supply targets. Uses and reports upon effective quality control mechanisms. Explains how the assessments findings have or will be monitored and updated (where appropriate).

6 7

Source: Scottish Government (2008)

Context 1.8 The Scottish Ministers approved the Aberdeen City and Shire Structure Plan in August 2009. The timing of the plans preparation meant that it was not able to be informed by a full housing need and demand assessment, although a provisional view of housing need based on the guidance did inform the plan. Demographic, household, economic and housing market trends as well as forecasts / projections were also integrated into the development of the plan. 1.9 The primary purpose of the current assessment is to inform the local development plan and the LHS update, including the annual Strategic Housing Investment Plan (SHIP) being prepared by the two councils.

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1.10 However, this assessment will be updated in early 2011 to inform the main issues report for the strategic development plan and the new LHS to be prepared by the two councils. 1.11 Following the updated assessment in 2011, it is anticipated that it will be regularly updated and monitored but reviewed on a five-yearly cycle. Strategic Housing Market Partnership 1.12 Each local authority has existing housing forums which have been running for a number of years in the context of their local housing strategies. In order to support and inform the housing need and demand assessment, a Strategic Housing Market Partnership was established based on membership of the two existing groups. Membership consists of: Aberdeen City Council (Housing) Aberdeen City Council (Social Work) Aberdeenshire Council (Housing and Social Work) Aberdeen City Council (Planning) Aberdeenshire Council (Planning) Aberdeen City Council (Economic Development) Aberdeenshire Council (Economic Development) Aberdeen City Council (Planning Gain) Aberdeenshire Council (Planning Gain) Aberdeen City and Shire Strategic Development Planning Authority Cairngorms National Park Authority Scottish Enterprise The Aberdeen City Alliance (TACA) Aberdeenshire Community Planning Partnership Gypsies/Travellers Representative Community Health Partnership Aberdeen Solicitors Property Centre Council of Mortgage Lenders representative Homes for Scotland Homes for Scotland Grampian Housebuilders Committee Rent Registration Service RSL Representatives Scottish Rural Property and Business Association (SRPBA)

1.13 The responsibilities of the partnership include: Sharing and pooling information and intelligence, including relevant contextual material and policy information; Assisting with the development of a project plan for completion of the assessment and ensuring its findings are regularly reviewed; Supporting officers in the analysis and interpretation of housing market intelligence;

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Signing off the assessment report and the core outputs; and Considering the implications of the assessment, including housing supply targets for inclusion in local housing strategies.

1.14 A number of meetings and workshop sessions have been held since the partnership was established in order to inform and agree the various stages and components of the assessment. Table 1.3 below highlights these, while full minutes and meeting notes can be found in appendix 1. Table 1.3: Meetings of the Strategic Housing Market Partnership
When
5 June 2008

Purpose
Inaugural meeting

Outcome
Agreed membership, terms of reference, scoping paper, reporting structure, and geography of housing market areas. Agreed progress, appointment of Newhaven Research to advise / prepare project plan and to hold a focus group event. Report included in supporting information.

5 August 2008

Research and information update. Agree project plan. Market Activity Focus group event

10 September 2008

6 November 2008

Market Activity Focus Group. 1. How has the housing market in the Aberdeen City and Shire area been affected by recent changes in the wider UK housing market? 2. How will these changes in the local market affect residents? 3. How will our local housing market area develop over the next 5/10/15 years? Information and Research update Market Activity Focus group Format for the scenario event was: 1. Presentation of the model used to inform the HNDA to date 2. Discussion on issues including backlog need, affordability, housing demand, new build rate. 3. Examination of worst- best case scenarios To present findings from Economic and demographic context and Current housing market chapters. Presentation of initial findings from the housing needs modelling exercise and discussion of underlying assumptions

22 June 2009

Agreed progress to date, Focus Group report and outcome. Scenarios examined, discussed and agreed and agreed to carry out House Buyers Survey.

30 October 2009

27 November 2009

Agreed latest content and focus of chapters and identified key gaps to be explored. Agreed data sources , including high strategic forecasts (to align with Structure Plan) , and assumptions that should form the basis of the central needs estimate

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When
14 April 2010

Purpose
Presentation on draft assessment and discussion on research questions for chapter 7 Joining up the Assessment

Outcome
The partnership agreed that the HNDA should be submitted to the Centre for Housing Market Analysis.CHMA.

1.15 At the meeting of 14 April 2010 the Strategic Housing Market Partnership agreed that the report should be submitted to the Centre for Housing
Market Analysis (CHMA).

Housing Market Areas 1.16 Housing market areas are functional areas that represent the spatial area where the majority of people moving house (without changing employment) search and purchase housing. The Strategic Housing Market Partnership has confirmed that the Aberdeen Housing Market Area (Aberdeen HMA) and the Rural Housing Market Area (Rural HMA) should form the focus of the 2009-based assessment. These two housing market areas are shown in figure 1.1 below. Figure 1.1: Housing Market and Council Areas
Fraserburgh Banff

Turriff Peterhead Huntly

ABERDEENSHIRE

Ellon Inverurie

Alford Westhill Ballater Cairngorms National Park (Aberdeenshire) Braemar Stonehaven Aboyne

ABERDEEN CITY

Banchory

Laurencekirk

Aberdeen Housing Market Area Rural Housing Market Area

1.17 The adoption of the Aberdeen and Rural HMAs is consistent with the current Aberdeen City and Shire Structure Plan which uses these boundaries to inform the housing land allowances within the structure plan. 1.18 The Aberdeen HMA incorporates both Aberdeen City and part of Aberdeenshire. The remaining area of Aberdeenshire Council is termed the Rural HMA.

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1.19 For the purpose of this research the area within the Cairngorms National Park (CNP) has been included in the Rural HMA. This was necessary because the Aberdeenshire Local Housing Strategy covers the whole of the council area and much of the necessary data is not available for small areas. The numbers involved are very small (approximately 3,200 people in 2008, 0.7% of the total population of the area) so this does not have any significant effect to the outcome of this assessment. 1.20 Appendix 2 sets out more detail housing market area definition. Structure of the Housing Needs and Demand Assessment 1.21 Table 1.4 below summaries the main themes and associated research questions addressed in chapters 2 to 7 of this report. The questions highlighted in bold indicate the core questions set out in the Scottish Government guidance. Table 1.4: Structure of Housing Need and Demand Assessment
2 Chapter The demographic and economic context Theme 2.1 Population and household trends Research questions What have been the main developments in terms of the size, profile and spatial distribution of the population and households over the past decade? To what extent have these demographic trends been shaped by changing migration patterns? How has the local economy performed in the past 10 years What are the key issues for policy or strategy? What is the current housing stock profile? How has the housing stock changed over the last ten years? What do market indicators tell us about current demand, particularly house prices/affordability and how effectively has the market responded to changes in demand? How has demand changed? How are market characteristics related to each other geographically? What do the trends in market characteristics tell us about the key drivers in the market area? What are the implications in terms of the balance between supply and demand and access to housing? What are the key issues for future policy / strategy?

Current housing market

2.2 Economic and labour market 2.3 Bringing the evidence together 3.1 The housing stock

3.2 Market activity

3.3 Bringing the evidence together

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Future housing market

4.1 Indicators of future demand

Housing requirements of specific household groups Housing need

4.2 Bringing the evidence together 5.1 Specific household groups

6.1 Current housing need

6.2 Future need

How might the total number of households and household structure change in the future? How might economic factors influence total future demand? Is affordability likely to worsen or improve? What are the key issues for future policy / strategy? What are the housing requirements of specific household groups? How well does the housing market meet these at present? How are these likely to change? What is the total number of households in housing need currently who cannot afford to meet their own needs in the market and whose needs cannot be met in situ? What are the key characteristics of their unmet need? How many newly arising households are likely to be in housing need each year? available to meet housing need?

6.3 Affordable housing supply

What is the level of existing stock What is the likely level of future
annual supply of affordable housing? What is the total number of households in need (net annual estimate) or estimated range? What choices do households have within the existing affordable housing stock? What are the requirements for different sized properties? How is the private rented sector used to accommodate need? What are the key issues for future policy / strategy?

6.4 Bringing the evidence together

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Joining up across the assessment

7.1 Bringing together the outputs from the preceding stages

How does the estimate of future annual change in the total number of households compare with the partnerships aspirations and views on economic and population growth? Is there any evidence of imbalance in the housing system and what policy interventions may be needed to correct this? What options are available for addressing each of the different types of need for the different types of household estimated to be in need? What is the scope for the private rented sector to assist in meeting identified need and demand? How does the net annual need figure compare to the estimate of total number of households? How does the assessment of housing need and demand at housing market area level translate into housing supply targets and housing land allocations at local authority level? What are the implications for housing supply targets and land allocations if both need and demand is addressed at housing market level?

Study methods 1.22 The Scottish Government recommend that secondary data (i.e. data from local administrative or national data collection exercises), rather than specially commissioned surveys, should be used where appropriate and feasible. Consistent with this advice, this study has involved: Desk-based analysis of data, reports and other relevant information from national sources and local authority databases; Primary data in the form of a house buyers survey, conducted by IBP Strategy and Research, to provide some insight into housing and locational preferences and other factors that have shaped consumer housing demand. Details of the methodology and sample size can be found in appendix 3; Two interactive stakeholder sessions in the form of a Housing Market Focus Group and a Scenario event; Interviews with a range of experts and key stakeholders in relation to the private rented sector given the comparative absence of secondary data; and

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Interviews with a range of experts and key stakeholders to compliment the secondary data available.

1.23 The Strategic Housing Market Partnership agreed that the Assessment should be carried out by officers of Aberdeen City Council, Aberdeenshire Council and the Aberdeen City and Shire Strategic Development Planning Authority. 1.24 Newhaven Research were also commissioned to offer comment and advice on the contents of draft outputs and to assist in the housing need modelling work reported in Chapter 6. 1.25 A glossary and list of abbreviations can be found at the end of the report.

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2.

Demographic and Economic Context

2.1 Demographic and economic trends are important drivers of the housing market, and especially housing demand. To provide a context for the analysis presented in subsequent chapters, this chapter explores demographic (paras 2.2 2.35), household (paras 2.36 2.45) and economic (paras 2.46 2.91) trends over the past decade. Also presented are associated issues such as deprivation trends that contribute to the overall quality of settlements as places to live. Further more detailed data and analysis can be found in appendix 4. The research questions that are addressed in this chapter are: What is the current demographic profile of the area? How has this changed over the last ten years? What is the current economic profile of the area? How have these profiles changed over the last ten years?

Recent Demographic Trends 2.2 The General Register Office for Scotlands (GROS) latest population estimates are for mid-20081. These figures indicate that the population of the area in 2008 was 451,860, which was 9,990 more than in 1998. This is equivalent to an increase of 2%, which is similar to the rate of growth experienced by Scotland over this period. 2.3 Looking across the area, the population of both HMAs increased by 2% (see table 2.1 below) and at present, 72% of the population live in the Aberdeen HMA and 28% live in the Rural HMA2. Table 2.1: Population estimates (1998-2008)
1998 2008 Change Aberdeen City 215,650 210,400 -5,250 Aberdeenshire 226,220 241,460 15,240 Aberdeen City and Shire 441,870 451,860 9,990 Aberdeen HMA 309,309 316,302 6,993 Rural HMA 132,561 135,558 2,997 Scotland 5,077,070 5,168,500 91,430 Source: General Register Office for Scotland population estimates (2008) Percentage -2% 7% 2% 2% 2% 2%

2.4 However, within the Aberdeen HMA the spatial distribution of the population growth has been uneven. Aberdeen City experienced a period of population decline prior to 2005 and although it has experienced growth since then, the picture over the last 10 years is still one of decline (-2%).

Immediately prior to submission, 2009 estimates were published. These indicated an Aberdeen City population of 213,810 (1.6%) and Aberdeenshire population of 243,510 (+0.8%). The Aberdeen City and Shire population of 457,320 was a 1.2% rise on 2008. 2 In order to be able to demonstrate the trend over the past 10 years a different method to splitting the areas to the 2008 population estimates has been used. This is because the data was not previously available in the same format.

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2.5 As Figure 2.1 shows, following a period of decline between 1998 and 2002, Aberdeen City and Shire experienced strong population growth from 2003 to 2008, which as discussed in more detail below, has been driven by a sharp increase in the rate of net inward migration. Detailed figures are present in appendix 4.a. Figure 2.1: Annual change in Aberdeen City and Shire population 1998 to 2008
1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0% 1998-1999 -0.2% 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

-0.4%

-0.6%

-0.8%

Source: General Register Office for Scotland

Population age structure 2.6 Table 2.2 summarises the population age structure for Scotland, Aberdeen City and Shire and its constituent administrative and functional areas. In 1998 the age profile of the population of Aberdeen City and Shire and Scotland were reasonably similar. The main difference was that relative to Scotland, the local population had a higher proportion aged 16-29 years and a lower proportion aged 50+ years. By 2008, this difference had largely disappeared. 2.7 In the Aberdeen HMA, population growth has been accompanied by population aging. Although population aging is a Scotland wide trend, the rate of growth amongst older age groups, and in particular those aged 50-64 has been sharper than nationally. Detailed figures of population change by age group reported in Appendix 4.b show that in the decade to 2008:
The numbers in the 50-64 years group in the Aberdeen HMA has risen by 9,670 to

59,720. This is equivalent to an increase of 19% whereas the comparable Scotland wide rate is 14%. One result of this trend is that the proportion of Aberdeen HMA residents aged 50-64 years is now similar to that for Scotland as a whole.

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 The numbers of people aged 65+ years in the Aberdeen HMA has increased by

7% compared to 8% for Scotland as a whole, and Aberdeen HMA continues to have proportionately fewer people aged 65+ (15%) than the Scottish average (17%).
The numbers of younger adults aged 16-24 years in the Aberdeen HMA has

decreased by 5% to 39,321. The reasons for the decline in the numbers of 16-24 year olds living in the HMA and in particular Aberdeen City are considered below. Table 2.2: Population structure, 1998-2008 (Percentages)
1998 Aberdeen City Aberdeenshire Aberdeen City and Shire Aberdeen HMA Rural HMA Scotland Aberdeen City Aberdeenshire All Ages No 215,650 226,220 441,870 313,829 128,041 5,077,070 210,400 241,460 0-15 (%) 17.1 21.7 19.4 18.5 21.7 19.7 15.7 19.2 1624 (%) 14.6 9.8 12.2 13.1 9.8 11.1 2008 13.7 10.1 2529 (%) 8.7 6.3 7.5 7.9 6.3 7.2 8.9 4.5 6.6 7.5 4.5 6.5 3034 (%) 8.2 7.8 8.0 8.1 7.8 7.9 7.0 5.2 6.1 6.4 5.2 5.8 3549 (%) 21.1 23.7 22.4 21.9 23.7 21.3 21.5 23.9 22.8 22.3 23.9 22.4 50-64 (%) 15.4 17.1 16.3 15.9 17.1 17.1 17.8 21.3 19.6 18.9 21.3 19.1 6574 (%) 8.3 7.6 7.9 8.1 7.6 8.8 7.9 8.7 8.3 8.2 8.7 9.0 75+ (%) 6.6 6.0 6.3 6.4 6.0 6.8 7.4 7.1 7.3 7.3 7.1 7.6

Aberdeen City and Shire 451,860 17.6 11.8 Aberdeen HMA 315,194 16.9 12.5 Rural HMA 136,666 19.2 10.1 Scotland 5,168,500 17.7 12.0 Source: General Register Office for Scotland (GROS)

2.8 The pace of population aging in the Rural HMA has also been sharper than in the Aberdeen HMA or Scotland as whole. In 2008 some 21,662 people aged 65 years or older were living in the Rural HMA compared to 17,386 in 1998. This equates to an increase of 25% compared to 8% nationally. This higher rate of increase in older people locally reflects a combination of the aging of the resident population and the inflow of older migrants from elsewhere in the UK to various settlements across rural Aberdeenshire. 2.9 In terms of the two local authority areas, Table 2.2 and supplementary tables presented in appendix 4. c highlight that from 1998 to 2008:
Both local authorities, but especially Aberdeenshire, have experienced a growth

in the numbers and proportions of people aged 50 years or above.

There has been little change in the numbers aged 35-49 years in the City (-87)

but a substantial growth in the numbers of 35-49 year olds in Aberdeenshire (+4,001). As discussed below, this reflects the underlying UK wide trend for

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households with children to move from cities to surrounding suburban and more rural areas (see Champion, T et al 20073)
The numbers of 16-24 year olds living in Aberdeenshire have increased by

2,121 to 24,399. This is equivalent to an increase of 10%, which is broadly in line with the Scotland wide trend (9%). By contrast, the numbers of 16-24 year olds living in Aberdeen City appears to have fallen by -2,813 to 28,732.
In 2008 fewer than 14% of Aberdeen Citys population fell into the 16-24 age

group. This is a higher proportion than for Scotland (12%) or Aberdeenshire (10%). However it is lower than the equivalent average figure for Edinburgh, Glasgow and Dundee (15%). 2.10 The reasons for the decline in Aberdeen Citys 16-24 year old population are not easy to discern. As table 2.3 highlights, the GROS report that most of this decline has been concentrated amongst those aged 18 or 19 years. Table 2.3: Age breakdown of adults aged 16 to 24 years in Aberdeen City, 2008
Age 16 17 18 19 20 21 22 2008 2,268 2,384 2,572 3,143 3,612 3,670 3,820 1998 2,509 2,796 3,603 4,011 3,888 4,015 3,755 Change -241 -412 -1,031 -868 -276 -345 65 Source: General Register Office for Scotland 2008 based population estimates 23 3,679 3,491 188 24 3,584 3,477 107

2.11 Over the past decade, as shown in Figure 2.2, the number of students that attend the two universities in Aberdeen have increased by over 5,000. Although some of the increase in the student population may be due to an increase in mature students, it seems plausible that some of this increase reflects a growth in young adults entering university as under-graduates.

Champion, C., Coombes, M., Raybould, S. and Wymer, C. (2007) Population movement and the socio-economic complexion of communities, JRF

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Figure 2.2: Number of Students in Institutes of Higher Education 1997 - 2008

30000 25000

No. Students

20000 15000 10000 5000 0 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 University of Aberdeen Robert Gordons University Combined total

Source: http://www.hesa.ac.uk

2.12 Moreover, Department of Work and Pensions figures suggest around 10,370 overseas migrants registered in Aberdeen City since 2002 have been under the age of 25 years4 2.13 It is therefore possible GROS may have somewhat over-estimated the scale of net out-migration amongst 16-24 year olds, but this matter warrants further investigation by the Strategic Housing Market Partnership. Components of Population Change 2.14 The two components of population change are natural change (i.e. births and deaths) and migration. These components are discussed in detail elsewhere5 but GROS figures, which are available down to local authority level, suggest that from 1998 to 2008:
There were just 25 fewer births than deaths in Aberdeen City. Over the decade

as a whole, natural change has had little impact on changes in the size of the Citys population, although there have been fluctuations from year to year.
There were 3,348 more births than deaths in Aberdeenshire. This suggests that

22% of the population growth in Aberdeenshire (15,240) over the decade can be attributed to natural change.

Migrant Workers in Aberdeen City and Shire Briefing Paper 2009/3 http://www.aberdeencity.gov.uk/nmsruntime/saveasdialog.asp?lID=26026&sID=3365 5 http://www.aberdeencity.gov.uk/nmsruntime/saveasdialog.asp?lID=23310&sID=3365

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Migration Flows 2.15 Migration has been the major factor that has influenced population change over the past decade. As Figure 2.3 shows, between 1998 and 2008: Over the decade as a whole, 5,225 more people moved away from Aberdeen City than moved to the City. This overall level of net out-migration (i.e. outmigration minus in-migration) has been considerably moderated by the emergence of net in-migration in the period since 2004. For example, in the year to June 2002 alone, there was a net out migration of 2,438 but in the year to June 2007 there was a net in-migration in excess of 2,000. Aberdeenshire experienced net in-migration of 11,892 people. Again, as Figure 2.3 shows, much of this gain has been since 2003/4.

Figure 2.3: Net migration, Aberdeen City & Shire, 1996 2008

3,000 2,000 No. of Migrants 1,000 0 -1,000 -2,000 -3,000

Aberdeen Aberdeenshire

Source: General Register Office for Scotland

2.16 The increase in net migration since 2003/04, mirrors national trends and the increase in individuals coming from the rest of the UK and elsewhere in Europe to Scotland to work. 2.17 GROS have recently published detailed migration statistics at local authority level for 2006/7 and 2007/8. As Table 2.4 shows:
Some 3,037 more people moved to Aberdeen than moved away. This reflects

the high numbers of people moving to Aberdeen from overseas and the rest of the UK relative to the numbers of people that leave Aberdeen and move outside Scotland. In particular, the high rate of net in-migration in respect of overseas residents has more than offset net out-migration in relation to

19 96 / 19 97 97 19 /98 98 19 /99 99 / 20 00 00 20 /01 01 / 20 02 02 20 /03 03 / 20 04 04 20 /05 05 20 /06 06 / 20 07 07 /0 8

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migration flows between Aberdeen and elsewhere in Scotland, including Aberdeenshire.

Some 4,260 more people moved to Aberdeenshire than moved away. In

contrast to the City, inflow and outflows were dominated by people moving within Scotland or the rest of the UK. Table 2.4: In, out and net migration 2006/07 and 2007/8 combined
In-migration within Scotland Rest of UK Aberdeen City 11,395 5,440 Aberdeenshire 12,026 5,051 Out-migration Total within Scotland Rest of UK Aberdeen City 22,784 14,210 4,764 Aberdeenshire 15,402 10,032 3,518 Net-migration Total within Scotland Rest of UK Aberdeen City 3,037 -2,815 676 Aberdeenshire 4,260 1,994 1,533 Source: General Register Office for Scotland Total 25,821 19,662 Overseas 8,986 2,585 Overseas 3,810 1,852 Overseas 5,176 733

Inter local authority migration flows 2.18 Looking more closely at GROS estimates of the migrants that moved within Scotland during 2006/7 and 2007/8: Of the 14,210 migrants that moved away from Aberdeen City and stayed within Scotland, 50% moved to Aberdeenshire (7,132). Most of the other outmigrants moved to Edinburgh, Glasgow, Highlands, Moray, Dundee plus Perth and Kinross. Of the 11,395 migrants that came to Aberdeen City from elsewhere in Scotland, 39% came from Aberdeenshire (4,462). The remaining in-migrants came from across Scotland, although the highest percentages came from Edinburgh, Glasgow, Highlands, Moray, Dundee and Perth and Kinross Of the 12,026 migrants that moved to Aberdeenshire from elsewhere in Scotland, 59% came from Aberdeen City (7,132). A further 14% came from the neighbouring authorities of Angus, Moray and Highlands.

2.19 The scale and direction of annual flows of people to and from Aberdeen and Aberdeenshire between 2001/2 and 2007/8 are shown in Figure 2.4. Although the numbers moving from Aberdeen City to Aberdeenshire (the blue column) and vice versa has fluctuated from year to year, there has been no substantive change in the pattern of flows over this period. 2.20 Between 2001/2 and 2007/8 an annual average 3,601 people moved to Aberdeenshire from Aberdeen City whilst 2,218 people have moved from Aberdeenshire to Aberdeen. Net outmigration from Aberdeen City to Aberdeenshire Page 16

has therefore averaged 1,383 people each year, although the actual number has varied between 1,000 and 1,750 people. Figure 2.4: Number of people moving to Aberdeen City and Aberdeenshire from the other area, 2001/2 to 2007/8 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
Source: General Register Office for Scotland

Aberdeenshire

Aberdeen City

2.21 The 2001 Census records the numbers of wholly moving households. This term refers to households where all members had moved from the same previous address in the year to 29 April 2001. For Aberdeen City, there was a net loss of wholly moving households with dependent children: 20% of the inflow of wholly moving households had dependent children, compared with 26% of the outflow. In Aberdeenshire, the situation was reversed. There was a net gain of wholly moving households with dependent children: 36% of the total inflow, compared with 25% of the outflow.

2.22 Census evidence supports local perceptions that there are two main reasons why Aberdeen City, in common with Scotlands other three major cities, experiences net out-migration in relation to migrants moving within Scotland: Firstly, a very large proportion of moves out of the City are short-distance residential related moves by established households moving from the City to Aberdeenshire, and in particular settlements within the wider Aberdeen HMA. Second, there are considerable numbers of longer distance moves, many involving recent graduates moving back to their area of origin and/or somewhere else to pursue employment opportunities.

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Overseas migrant workers 2.23 The numbers of National Insurance Number (NINo) registrations to overseas workers in Aberdeen City and Shire between 2002/03 and 2008/09 are summarised in Figure 2.56. These figures reinforce GROS estimates that Aberdeen City has experienced much higher rates of in-migration from individuals coming from abroad than Aberdeenshire. Figure 2.5 National Insurance Registrations to Migrant Workers
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 Aberdeen City Aberdeenshire

Source: Department of Work and Pensions

2.24 Figure 2.5 shows that the sharp up-turn in net in-migration has occurred subsequent to the 2004 enlargement of the European Union (EU) following the accession of A8 and A2 countries7 to the EU. 2.25 The latest figures, published in June 2009, indicate that since 2002 some 36,000 migrant workers resident in Aberdeen City and Shire were allocated a National Insurance number of which: Over 27,000 were registered between 2004/5 and 2008/9, of which 3 out of 4 have registered in Aberdeen. Almost 16,000 have come from the 11 EU accession countries, including 10,000 from Poland. Over 3 out of 5 of migrants from the EU accession countries have registered in Aberdeen.

A fuller analysis of NINo registrations to non-UK nationals can be found in Migrant Workers in Aberdeen City and Shire (Ref: 2009/03), which can be downloaded from: http://www.aberdeencity.gov.uk/ACCI/web/site/Statistics/SL/stt_Home.asp 7 A8 = Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. A2 = Bulgaria and Romania.

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Over 5,000 have come from other EU countries, particularly the Republic of Ireland, France, Germany and the Netherlands. Over 4 out of 5 of this subgroup of migrants have registered in Aberdeen. Almost 8 out of 10 were under the 35 years of age at the point of registration, including 37% that were under 25 years and 42% aged 25 to 34 years.

2.26 Migrant workers play a significant role in the local economy, accounting for an estimated 3.7% of Aberdeens working age population and 1.1% of Aberdeenshires working age population compared to 1.0% of Scotlands population. There is no comprehensive data on the qualifications of migrant workers, but the majority of workers registered on the Worker Registration Scheme were employed in unskilled or semi-skilled posts. In Aberdeen City, almost a quarter worked as cleaners or domestic staff. In Aberdeenshire, the same proportion were described as process operatives8. 2.27 In 2008/09, there were 7,120 National Insurance Number (NINo) registrations to non-UK nationals in the Aberdeen City and Shire Area, down from 7,460 in 2007/8 and 7,750 in 2006/7. This downturn has been lower than has occurred in Edinburgh and some other areas of Scotland. Nonetheless it does appear that the overseas migration has passed its peak. 2.28 No doubt the credit crunch and subsequent recession in the UK and elsewhere, has reduced demand for labour, and has contributed to a downturn in the numbers of overseas in-migrants entering the UK. Relaxation of restrictions in other EU countries on the number of migrants that they are willing to accept and the introduction of a UK points based system for assessing applications for migrant workers outwith EU countries are also likely to have contributed to the fall in overseas migration. 2.29 There is much uncertainty regarding short and long-term prospects for the UK and local economy, which makes it difficult to predict future overseas migration. Consequently migration assumptions built into demographic projections and forecasts must be treated with some caution. Gender and sexual orientation 2.30 The proportion of females and males is fairly consistent across Aberdeen City and Shire and at HMA level. Approximately 49.5% of the population are male and 50.5% of the population are female. This is a result of longer female life expectancy in both local authorities9. 2.31 There are difficulties in quantifying the numbers of people who are from the Lesbian, Gay, Bisexual and Transgender (LGBT) community. The Scottish Government10 estimates the number of LGBT people as approximately 5% of the
Migrant Workers in Aberdeen City and Shire (Ref: 2009/03), which can be downloaded from: http://www.aberdeencity.gov.uk/ACCI/web/site/Statistics/SL/stt_Home.asp 9 Life Expectancy for Administrative Areas within Scotland, 2006-2008, http://www.groscotland.gov.uk/files2/stats/life-expectancy-admin-areas/0608le-alltables.xls 10 Scottish Government (2008) Challenging Prejudice, Recommendations of the LGBT Hearts and Minds Agenda Group http://www.scotland.gov.uk/Resource/Doc/212871/0056591.pdf
8

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population, therefore for the population of Aberdeen City and Shire over 12 years old this may roughly equate to 20,900 people. Ethnicity 2.32 The Census provides the only comprehensive if dated source of information on ethnicity. Table 2.6 shows that in 2001 some 7,779 individuals from a non-white ethnic background lived in the Aberdeen City and Shire Area. This equated to 1.8% of the population, slightly below the comparable rate of 2% for Scotland. 2.33 In 2001 almost 4 out of every 5 residents from a non-white ethnic minority lived in Aberdeen City, reflecting the fact that the increase in the local ethnic minority population between 1991 and 2001 was largely restricted to the City. Between 1991 and 2001 the numbers of people from non-white ethnic groups living in Aberdeen doubled to 6,151, in part due to the increase in the numbers of people of Indian, Pakistani and Bangladeshi origin from 622 to 1,580. In Aberdeenshire the number of people from a non-white ethnic group increased by around 600. Table 2.5: Ethnic groups in Aberdeen City and Shire, 2001
Ethnic Group Aberdeen City White ethnic groups All other ethnic groups All People Aberdeenshire White ethnic groups All other ethnic groups All People Aberdeen City and Shire White ethnic groups All other ethnic groups All People Aberdeen HMA White ethnic groups All other ethnic groups All People Rural HMA White ethnic groups All other ethnic groups All People Scotland White ethnic groups All other ethnic groups All People Source: 2001 Census (Table UV 10) 4,960,334 101,677 5,062,011 98.0% 2.0% 100.0% 128,036 696 128,732 99.5% 0.5% 100.0% 303,181 7,083 310,264 97.7% 2.3% 100.0% 431,217 7,779 438,996 98.2% 1.8% 100.0% 225,243 1,628 226,871 99.3% 0.7% 100.0% 205,974 6,151 212,125 97.1% 2.9% 100.0% Number % of population

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2.34 In 2001 individuals from the Indian/Pakistani/Bangladeshi community formed the largest single ethnic group in both local authorities and housing market areas. Subsequent to the increase in overseas in-migration, the ethnic composition of the Aberdeen City and Shire area population has changed, although statistical evidence of the changing ethnic mix of the population remains limited. 2.35 The potential specific housing related needs of those from ethnic backgrounds and other equalities groups are discussed in more detail in Chapter 5 the Housing Requirements of Specific Household Groups. Recent Household Trends 2.36 From 1981 to 2001, Census figures confirm that the number of households living in Aberdeen City and Shire increased at a much more rapid rate than elsewhere in Scotland. In 2001 187,749 households lived in the area, 37% more than in 1981. By contrast, Scotland saw a 23% increase in households. The rate of growth was particularly marked in Aberdeenshire, where the number of households increased by almost 47%. 2.37 Since 2001, the numbers of households in Aberdeen City and Shire have continued to increase at a faster rate than for Scotland as a whole. GROS estimate that some 204,415 households lived in the area in 2008, some 9% more than in 2001. The comparable Scotland-wide rate was 6%. Much of this growth has occurred since 2003. 2.38 As Table 2.6 shows, household growth in the Aberdeen HMA and the Rural HMA have continued to rise at a faster rate than the national average. Table 2.6: Households in Aberdeen City and Shire, 2003-2008
Aberdeen City Aberdeenshire Aberdeen City and Shire 191,651 194,232 196,670 199,509 202,386 204,415 12,764 6.7% Aberdeen HMA Rural HMA Scotland

97,924 93,727 138,538 53,113 2,229,535 2003 98,635 95,597 140,060 54,172 2,249,160 2004 99,269 97,401 141,581 55,089 2,271,353 2005 100,735 98,774 143,536 55,973 2,291,415 2006 102,195 100,191 145,610 56,776 2,313,778 2007 102,899 101,516 146,999 57,416 2,331,250 2008 4,975 7,789 8,460 4,304 101,715 Change 20035.1% 8.3% 6.1% 8.1% 4.6% 2008 Source: GROS local authority household estimates and datazone occupied dwelling estimates Note: Comparable HMA level household estimates for the years prior to 2003 are not available

2.39 It also shows that the rate of growth in the numbers of Aberdeen households, although lower than elsewhere in the area, has been higher than the Scotland wide rate despite lower rates of population growth. This reflects the continuing trend towards the formation of smaller and in particular single person households has been more marked in Aberdeen City.

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Household Composition and Tenure 2.40 As Table 2.7 shows, in 2001 the composition of households living in Aberdeen City and Shire and Scotland were reasonably similar. However, consistent with the age structure of the population, Aberdeen City and Shire had a slightly higher proportion of couple and family households. Table 2.7: Composition of households in Aberdeen City and Shire Area, 2001
Household type Aberdeen City 24% 25% 5% Aberdeenshire Aberdeen City and Shire 19% 27% 5% Aberdeen HMA 21% 26% 5% Rural HMA 13% 29% 5% Scotland

Single Adult Couple (inc.pensioner) Lone Parent with Dependant Child(ren) Couple with dependant Child(ren) Single Pensioner Other All Households Source: 2001 Census

12% 30% 4%

18% 25% 7%

16% 13% 16% 100%

27% 13% 14% 100%

21% 13% 15% 100%

20% 13% 15% 100%

24% 14% 14% 100%

19% 15% 16% 100%

2.41 More significantly, there were sharp distinctions between the household profile of Aberdeen City and Aberdeenshire. In particular Aberdeenshire had a far higher proportion of couples with or without children than the City and a lower proportion of single households below pensionable age. The differences between the Aberdeen HMA and the Rural HMA were similar to that between Aberdeen City and Aberdeenshire but less extreme. 2.42 The profile of households in Aberdeen was similar to the profile of households in the other city authorities. Likewise, differences in the composition of households living in Aberdeen and in Aberdeenshire were similar to the pattern found in Scotlands three other city based housing market areas. This is indicative of the wide UK trend for cities to import younger people and to export family units (see Champion, et al 200711). 2.43 GROS household estimates provide some indication of household composition at local authority area level but not by tenure. The most recent published information on household composition by tenure is from the Scottish Household Survey and relates to 2007/08. 2.44 Table 2.8 and Table 2.9 plus tables in Appendix 4.d show that:

11

Tony Champion, Mike Coombes, Simon Raybould and Colin Wymer (2007) Population movement and the socio-economic complexion of communities, JRF

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Whilst the household composition of the population of Aberdeen City and Shire remains similar to that for Scotland, there remain sharp differences in the composition of households living in the two local authority areas. Both local authority areas and Scotland have seen a continuing increase in the numbers and proportions of single person and couple households since 2001, although the scale of change is difficult to quantify because of GROS and SHS figures are not directly comparable with Census figures.

Table 2.8: Composition of households in Aberdeen City and Shire, 2008

Aberdeen City (%) Single person under 65 Single pensioner 65+ Couple (2+ adults under 65 years) Older couple (2+ adults 65+ years) Family Lone parent All Households 31 13 26 9 14 7 100 Aberdeenshire (%) 15 13 31 13 24 4 15 101,516 Aberdeen City and Shire (%) 23 13 29 11 19 6 100 204,415 Scotland (%) 22 14 27 12 18 7 100 2,334,590

102,899 Base Source: General Register Office for Scotland 2009

Table 2.9: Estimated tenure of households in Aberdeen City and Shire

Aberdeen City (%) Owner occupied Social Rented Private Rented Other All Households 65 24 10 2 100 Aberdeenshire (%) 75 15 9 2 100 1,345 Aberdeen City and Shire (%) 70 19 9 2 100 2,389 Scotland (%) 66 23 10 2 100 27,225

1,044 Base (sample size) Source: Scottish Household Survey, 2007/08 (SHS)

The large majority of households now own their home but the rate is considerably higher in Aberdeenshire (75%) than in Aberdeen City (65%). This difference is mirrored by the high proportion of households that are outright owners in Aberdeenshire (37%) relative to Aberdeen City (25%) or Scotland (29%). There are clear differences in the significance of the social and private rented sectors between the two local authority areas, with proportionately more households in Aberdeen renting from a social or private landlord.

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Across both local authority areas, upwards of 7 out of 10 families, couples, and older couples live in the owner occupied sector. Around half of single person and single pensioner households live in the owner occupied sector whilst fewer than half of all lone parent households do so. Although Scottish Household Survey evidence suggests that there has been some increase in the numbers and proportions of single person and lone parent households able to access owner occupation, single person, single pensioner and lone parent households collectively account for 3 out 5 households that rent from a social landlord in both local authority areas.

2.45 Tenure patterns are explored in more detail in the next chapter. Nonetheless, it is clear that population and household growth and the expansion of the owner occupied sector has been inextricably linked to the structure and performance of the Aberdeen City and Shire economy, which in turn has been shaped by the changing fortunes of the oil and gas industry. Recent Economic Trends Recent Economic Performance 2.46 Over the past decade, Aberdeen City and Shire has remained one of the most buoyant local economies in the UK, and has been characterised by Experian (2008) as a high-prosperity, high-productivity economy12. 2.47 Economic activity rates reflect the numbers of people of working age that are in employment or seeking employment. Throughout the period from 2001 to June 2009 economic activity rates for Aberdeen City and Shire and the two local authority areas have generally exceeded 80% whilst economic activity rates for Scotland and Britain have generally remained below 80% (see Figure 2.6). 2.48 Likewise, the local economy has sustained considerably higher rates of employment than Scotland and Britain. As Figure 2.7 shows, there was a slight downturn in employment in the first half of 2008. However, in contrast to elsewhere in Scotland and Britain, employment levels and rates have increased since summer 2008. In the year to June 2009: Some 231,600 people living in Aberdeen (108,500) and Aberdeenshire (123,100) were in employment, including 21,600 self-employed individuals. The employment rate for Aberdeen and Aberdeenshire stood at 79.5% and 83.2% respectively, up from 79% and 82.1% in the year to June 2008. The employment rates for Scotland stood at 74.8% down from 76.3% in the year to June 2008.

12

Experian Aberdeen City Region Economic Review (February 2008), http://acsef.co.uk/Pages/ACSEFreport.aspx

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Figure 2.6: Economic Activity rate adults of working age 2001/2 -2008/9

Source: Annual Population Survey, (via Nomis, 2010)

Figure 2.7: Employment rate amongst those of working age, 2001/2 to 2008/9

Source: Annual Population Survey,(via Nomis, 2010)

2.49 One reason why the Aberdeen City and Shire economy has so far proved more resilient than elsewhere in Scotland and the UK to the global recession is because local economic performance is intrinsically linked to the performance of the North Sea oil and gas industry. 2.50 The oil and gas industry is widely considered the primary driver of the Aberdeen City and Shire economy. The sector directly employs over 21,000 people with a further 20,000 people in related service companies. Many more are employed in other activities associated with the industry. Oil & Gas UK is the leading representative body for the UK offshore oil and gas industry. It suggests that if

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supply chain activities and jobs generated through oil industry employee spending are included, the oil and gas industry could supports up to 136,000 jobs in the local economy. 2.51 Between 2000 and 2008 the price of Brent crude oil increased from less than $30 per barrel to over $147. As Experian13 (2008) note, this boosted capital expenditure on the UK continental shelf (UKCS) and stimulated oil and gas jobs growth throughout the period. As shown in Figure 2.8, the price fell in the second half of 2008 to less than $40 before rising throughout 2009 to around $80 in March 2010. Figure 2.8: Brent Crude Oil Price (January 2000 March 2010)
160

140

120

100

Oil Price ($)

80

60

40

20

0 07/01/00 07/07/00 07/01/01 07/07/01 07/01/02 07/07/02 07/01/03 07/07/03 07/01/04 07/07/04 07/01/05 07/07/05 07/01/06 07/07/06 07/01/07 07/07/07 07/01/08 07/07/08 07/01/09 07/07/09 07/01/10

Source: US energy Information Administration (www.eia.doe.gov)

2.52 In the past the performance of the local economy has been out of alignment with that of the national economy. For example, the oil price collapse in 1986 and again in 1998 lead to a downturn in the local economy and employment loss at a time when the Scottish and UK economies were growing. 2.53 Oxford Economics and SLIMS (2009) report that the annual average rate of Gross Value Added14 (GVA) growth from 1999 to 2006 was 1.8%, which was lower than the Scottish rate of 2.8% and the UK rate of 3.2%. Nonetheless, GVA per employee in Aberdeen City and Shire amounted to 39,700 per employee in 2007, compared to 32,600 in Scotland and 34,800 in the UK.
Experian (2008) Aberdeen City and Region Economic Review Gross Value Added (GVA) is often used to provide an indication of the contribution of each industrial sector to a large spatial areas economy. It is a measure of the difference between the value of goods and services produced and the cost of raw materials and other inputs which are used up in production.
14 13

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2.54 Government accounting conventions mean that GVA estimates exclude offshore oil and gas activity and thus under-report local economic performance. In this context it is worth noting that the Scottish Council for Development and Industry estimate that in 2006 the value of international sales from the Scottish oil and gas industry was 4.7 billion, the bulk of which would have been attributable to companies in and around Aberdeen. 2.55 Faced with continuing difficult global economic conditions, lower oil prices and constraints on the availability and cost of credit, oil and gas firms have began to review investment plans. Aberdeen and Grampian Chamber of Commerces recent Oil and Gas Surveys suggest the industry is looking to consolidate activities and to make less use of contract and temporary staff during the next 2 to 3 years15 2.56 Various independent economists16 therefore expect economic output and employment in the area to remain sluggish in the next couple of years. Ongoing developments and their possible impact on local economic prospects in the short and longer term are considered in chapter 4. Structure of local labour market 2.57 Annual Business Inquiry (ABI) based estimates of the number of employees by industrial sector are summarised in Figure 2.9. Along with accompanying tables in Appendix 4.e, it shows that: The largest employing industries in Aberdeen City and Shire are public services (30% of all jobs), financial & business services (21%) and retail & catering (20%). Relative to Scotland, the local economy has a high proportion of employees in the utilities, mining and quarrying sector. This sector is concentrated in the Aberdeen HMA and more especially Aberdeen City. This reflects the fact that this sector includes parts of the oil & gas sector. Employment growth has been concentrated in public services (29%) and financial & business services (26%), which expanded by 14,900 and 10,800 jobs respectively between 1999 and 2007. Much of this job growth has been located in Aberdeen. In the case of the public sector, this reflects the fact that most new jobs have been in the health and social sector.

15

Aberdeen and Grampian Chamber of Commerce (2009) 10th Oil and Gas Survey, February 2009 and 11th Oil and Gas Survey, November 2009: http://www.agcc.co.uk/oil-and-gas-survey/ 16 See Experian (2008), Oxford Economic and SLIMS (2009) and Mackay Consultants (2009)

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Figure 2.9: Employee share by industry in 2007

100% 90% 80% 70% 60% 50% 40%
Wholesale and retail trade Other community, social and personal service activities Health and social work

Education

Public administration, defense and social security Finance, IT, other business activities Transport, storage and communication Hotels and restaurants

30%
Construction

20%
Manufacturing

10% 0% Scotland Grampian Aberdeen City Aberdeenshire

Utilities, mining and quarrying

Agriculture, hunting, forestry and fishing

Source: Annual Business Inquiry 2007

By contrast, employment loss between 1999 and 2007 has been concentrated in the manufacturing (-9.9%), and agricultural & fishing sectors (-7.3%). The decline in both sectors reflects a combination of global competition, rising input costs and in some instances, such as fishing, increased regulation. Although ABI figures report a fall in the numbers of construction employees, the numbers of people working in this sector increased prior to 2007. The reason for this apparent contradiction has been the growth in numbers of selfemployed individuals working in this sector whereas the ABI only counts employees.

Spatial distribution of employment 2.58 From 1999 to 2007, the numbers of employees working in Aberdeenshire increased by 17% to 87,100 whilst the numbers of employees working in Aberdeen City increased by a more modest 5% to 172,10017. 2.59 The more modest growth in employees within the City reflects the fact that although many new jobs have been created in the City, job losses have also tended to be concentrated in the City. 2.60 Another significant factor has been a shift in the workplace location of employees. For example, in 1999 almost 63% of all construction employees were based in Aberdeen but by 2007 this proportion had fallen to 47%. Over the same
17

We estimate possibly 6% of employees live outwith Aberdeen City and Shire.

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period the numbers of construction employees based in Aberdeenshire increased by almost 2,000. There also appears to have been some change in the workplace location of oil and gas industry jobs, retail and catering jobs from the Aberdeen City to Aberdeenshire. 2.61 Much of the shift in workplace location has centred on the movement of business and employees from the City to surrounding settlements in the Aberdeen HMA. The reasons for this shift are not clear. One possibility is that there may have been a lack of suitable sites to support business growth within the City. 2.62 Based on evidence from the ABI and other sources, of the 259,200 employee jobs in the Aberdeen City and Shire economy in 2007, it is estimated that 4 out of 5 employees work within the Aberdeen HMA. The remaining employees are dispersed across the Rural HMA. 2.63 Of the 50,000 or so employees that work in the Rural HMA, comparatively high proportions of employees work in: public services manufacturing agriculture and fishing distribution, hotels and catering

2.64 As Table 2.10 shows, the Rural HMA has a lower proportion of individuals of working age than the Aberdeen HMA or Scotland as a whole. On the other hand, the numbers of working age adults is greater than the estimated numbers of jobs in the area. Assuming around 25% to 30% of the working age population are economically inactive, or unemployed, would suggest that anywhere from 5,000 to 10,000 people may commute from the Rural HMA into the Aberdeen HMA to work. Table 2.10: Working Age Population by Housing Market Area, 2008
Housing market Working age population % total population Aberdeen City 139,494 66.3 Aberdeenshire 149,031 61.7 Aberdeen City and Shire 288,525 63.9 Aberdeen HMA 212,366 67.9 Rural HMA 81,405 63.0 Scotland 3,357,099 65.6 Source: GROS small area population estimates by age group as at 30 June 2008

Unemployment 2.65 Official unemployment figures are shown in Figure 2.10. These statistics refer to people without a job who are available to start work, who have looked for work in the past four weeks or who are waiting to start a job they have already secured. 2.66 Consistent with the high rates of employment noted earlier, unemployment rates throughout Aberdeen City and Shire have for the most part remained well below the Scotland and Great Britain rate. Page 29

Figure 2.10: Unemployment Rates, 2004-9

Source: Annual Population Survey (via Nomis 2010)

2.67 Some insight into recent unemployment trends at the housing market area can be obtained from claimant count unemployment rate. Figure 2.11 shows that the recession has had less impact on the claimant count unemployment rate across Aberdeen City and Shire than nationally. 2.68 Rates across the two local authority areas and the two HMAs have increased since summer 2008. In January 2010, the rate for Aberdeenshire (1.6%) and Aberdeen (2.4%) remained well below the comparable rate for Scotland (4.3%) and Great Britain (4.5%). Moreover, both local authority claimant count rates as at January 2010 generally remain below the rates recorded for Scotland and Britain for much of the period from 2006 to 2008 inclusive

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Figure 2.11: Claimant Count Unemployment January 2006 January 2010

Source: Claimant Count Level (Nomis, 2010)

Incomes and Earnings 2.69 The Annual Survey of Hours and Earnings (ASHE) is the Scottish Governments preferred data source for earnings Table 2.11 shows trends for the lower quartile, median and upper quartile gross weekly wage from 2002 to 2009 for employees that reside in Aberdeen and Aberdeenshire. Table 2.12 shows the equivalent workplace earnings. 2.70 ASHE data is not available at housing market level. It has therefore been assumed that Aberdeen workplace earnings provide a reasonable approximation of earnings for the Aberdeen HMA as a whole. This decision is based on the high proportions of individuals that live in the Aberdeenshire part of the housing market but commute into city to work. Similarly, the Aberdeenshire workplace earnings appear to provide an indication of the distribution of earnings in the Rural HMA because in the main they will tend to reflect the earnings of those who live and work in the Rural HMA. 2.71 The two tables show that between 2002 and 200818: The median wage for employees residing in Aberdeen or Aberdeenshire has remained above the comparable Scotland-wide median wage over the period (see Table 2.11). The median wage at the Scotland and local level increased by an annual average of just over 4% over the 6 years.

18

Analysis focuses on trends to 2008 only because 2009 ASHE data is provisional and thus liable to considerable adjustment prior to finalisation. It is possible that changes to the method used to estimate earnings in 2006 may account for some of the blip figures around this period.

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Lower quartile resident earnings display a similar trend. In 2008 the lower quartile wage in Aberdeen was 345, some 25% more than in 2002. In Aberdeenshire the lower quartile wage was 350, 26% more than in 2002.

Table 2.11: Residence based analysis of changes in gross weekly earnings 2002-9
Earning distribution 2002 2003 2004 2005 2006 Aberdeen LQ 277 278 288 303 331 Aberdeenshire LQ 277 288 306 311 320 Scotland LQ 264 275 284 293 304 Britain LQ 281 290 300 307 316 Aberdeen median 389 409 399 441 460 Aberdeenshire median 422 422 418 446 468 Scotland median 369 382 391 410 428 Britain median 393 406 421 433 446 Aberdeen UQ 560 560 573 615 634 Aberdeenshire UQ 599 599 587 611 675 Scotland UQ 512 531 551 582 594 Britain UQ 555 576 593 614 632 Source: ONS Annual Survey of Hours and Earnings (via NOMIS) 2007 333 328 317 328 460 477 441 460 621 668 611 653 2008 345 350 329 341 481 521 463 480 673 751 644 682 2009 (provisional) 358 366 344 349 500 533 472 491 691 783 661 696

Table 2.12: Workplace based analysis of changes in gross weekly earnings 2002-9
Earning distribution 2002 2003 2004 2005 2006 Aberdeen LQ 292 300 307 335 355 Aberdeenshire LQ 257 272 282 286 295 Scotland LQ 265 275 284 293 304 280 289 299 307 316 Britain LQ Aberdeen median 442 443 425 469 481 Aberdeenshire median 373 374 387 383 433 Scotland median 372 381 390 409 428 392 405 420 432 445 Britain median Aberdeen UQ 637 653 629 690 730 Aberdeenshire UQ 512 530 551 555 598 Scotland UQ 514 530 551 582 594 554 575 593 613 632 Britain UQ Source: ONS Annual Survey of Hours and Earnings (via NOMIS) 2007 337 315 316 327 479 460 442 459 667 640 613 652 2008 368 333 329 340 532 468 463 479 766 673 642 680 2009 (provisional) 377 360 344 349 538 500 474 490 779 713 661 695

At 333, the lower quartile Rural HMA wage (i.e. Aberdeenshire workplace wage reported in table 2.10) remains the lower than comparable wage rates elsewhere in Aberdeen City and the Shire. There has been a sharp uplift in the Rural HMA lower quartile wage in the past 2 years. Consequently the Rural HMA wage is beginning to pull ahead of the Scotland-wide lower quartile wage of 329. It is possible that this may just be a very short-term event but this should be monitored carefully.

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The Aberdeen HMA (workplace Aberdeen wages) has higher wage levels at all points of the earning distribution than either local authority area or the Rural HMA. Earnings in the Aberdeen HMA are also significantly higher than comparable wage levels for Scotland or Britain at all points in the income distribution.

Net household incomes 2.72 In common with other local authority areas across Scotland, evidence on the incomes of households living in Aberdeen City and Shire is scarce. The 2005/06 Scottish Household Survey (SHS) net household income estimates (i.e. after tax), which are reported in Table 2.13, suggest the spread of incomes in Aberdeen and Aberdeenshire are reasonably similar to those for Scotland as a whole. 2.73 Aberdeen and Aberdeenshire have slightly lower proportions of households reporting a net income of up to 10,000 and slightly higher proportions reporting a net income of more than 25,000 relative to the Scotland. However, this difference may reflect sampling error. Table 2.13: Net Annual Household Income, 2004/5 and 2005/6
Income band Up to 6,000 6,001 - 10,000 10,001 - 15,000 15,001 - 20,000 20,001 - 25,000 25,001 - 50,000 Over 50,000 All Income Bands Missing Aberdeen City No. 60 188 238 162 119 335 63 1,165 71 % 5.2% 16.1% 20.4% 13.9% 10.2% 28.8% 5.4% 100% Aberdeenshire No. 68 183 170 164 155 403 81 1,224 12 % 5.6% 15.0% 13.9% 13.4% 12.7% 32.9% 6.6% 100% Scotland No. 1,987 5,266 6,164 4,299 3,282 7,822 1,037 29,857 1,156 31,013 % 6.7% 17.6% 20.6% 14.4% 11.0% 26.2% 3.5% 100% -

Base (sample size) 1,236 1,236 Source: Scottish Household Survey, 2004/5 and 2005/6

2.74 The income profiles of households in Aberdeen City and Shire that reside in the three main tenures (see Table 2.14) are also similar to comparable Scotland wide figures. The only significant differences are: A higher proportion of households renting privately in Aberdeen City and Shire (35%) have an income in excess of 20,000 relative to all households in Scotland renting privately (28%) Proportionately more homeowners in Aberdeen City and Shire (60%) have an income in excess of 20,000 relative to the owner-occupier household population across Scotland (53%)

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Around 74% of social rented tenants in the area have a net income of 15,000 or less

Table 2.14: Net Annual Household Income by Tenure in Aberdeen City and Shire, 2004/5 and 2005/6
Income band Up to 6,000 6,001 - 10,000 10,001 - 15,000 15,001 - 20,000 Over 20,000 Owned or Buying with Mortgage 4.3% 10.6% 11.8% 12.9% 60.3% Rented Social Sector 8.5% 32.0% 33.7% 14.0% 11.9% Rented Private 6.2% 18.0% 22.2% 19.1% 34.5% 100%

All Income Bands 100% 100% Note: excludes Other which has a small number of households. Source: Scottish Household Survey 2004/5 and 2005/6

Gross Household Incomes 2.75 Experian (2007) compare average gross household income per head of population19 for 1999 and 2006 at 2003 prices. Their analysis suggests that: The average household income for Aberdeen City and Shire over the period increased from 11,959 to 15,451, an increase of around 29%. In 2006 Aberdeenshires average income per head was 14,450, which was 1,950 less than the equivalent figure of 16,940 for Aberdeen City. The rate of growth in incomes has been marginally higher in Aberdeenshire with the result that this gap has changed little. In 2006 the average income for residents in Aberdeenshire was 18% higher than the Scottish average (12,237) and in Aberdeen City it was some 35% higher and this difference has increased over time.

2.76 The increasing gap between the average household income Aberdeen City and Shire and Scotland reflects recent increases in earnings and the very high wage rates in parts of the local economy. 2.77 ASHE suggests that in 2008 the median gross weekly earnings for those engaged in oil and gas extraction in the UK20 was over 900. This compares to less than 320 in the agricultural and fishing sector, 470 in the manufacturing sector, 495 in the construction sector, 530 in the financial services and between 350 and 450 for various public services.

This measure is based on wages plus other sources of income such as investments and benefits. UK figures are used because earnings by industrial sector is not reliable at the local level and is also has to be used with considerable caution at the Scotland level.
20

19

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2.78 It is therefore important to consider the distribution of gross incomes. Figure 2.12 compares the probable gross annual household income distribution using CACI PayCheck21 for the Aberdeen HMA, the Rural HMA and Scotland. 2.79 Around 1 in 6 households in the two HMAs areas have a gross annual income from all sources of no more than 15,000. The proportions for the two local authority areas and Scotland are similar. This seems plausible, as we understand CACI make adjustments to allow for state benefit and tax credit transfers. This has the effect of ascribing similar gross incomes to households who are at the lower end of the income distribution that are entitled to some form of state benefit regardless of location and whether benefits are claimed. Figure 2.12: Gross Household Income Distribution for Aberdeen City & Shire, 2008
95k_100k 10k_15k 15k_20k 20k_25k 25k_30k 30k_35k 35k_40k 40k_45k 45k_50k 50k_55k 55k_60k 60k_65k 65k_70k 70k_75k 75k_80k 80k_85k 85k_90k 90k_95k

5k_10k

0_5k
15.00% 10.00% 5.00% 0.00%

Scotland Aberdeen HMA Rural HMA

Source: CACI Paycheck

2.80 Around a fifth of Aberdeen HMA resident households have a gross annual income in the range from 15,000 to 25,000 compared to a quarter of all Scottish households and all Rural HMA households. 2.81 At the other end of the spectrum, 35% of households in the Aberdeen HMA have a gross annual income of 40,000 or more compared to 28% of all Scottish households and 31% of Rural HMA households.
21

CACI PayCheck is the only available local data source. It does not provide a precise measure of gross household income but instead estimates the probability that a household selected at random within a particular area will fall into a particular income band. CACI do not publish their method but the data is routinely used by local authorities throughout GB and appears to provide a reasonable indication of the distribution of gross household incomes across the 2 housing market areas.

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2.82 It is possible CACI PayCheck under estimates the number and proportion of low-income households in less densely populated areas of Aberdeenshire. A limitation of all models of this kind is that they can only make minor allowance for local variation for areas with small populations and have to rely on assumptions derived from national data sources. 2.83 Nonetheless, as Figure 2.13 shows, the variation in median gross household annual income across Aberdeen City and Shire are consistent with local perceptions that households in the Aberdeen HMA on average have higher incomes than those in the Rural HMA. Figure 2.13: Median Income at Intermediate Data Zone Level

Source: CACI Paycheck 2009

Deprivation 2.84 Aberdeen City and Shire is one of the most prosperous areas in the United Kingdom. This is driven by the oil and gas sector, producing GDP per capita and productivity levels which are far higher than Scottish and UK averages. Nonetheless, there are areas of deprivation and there are households at high risk of poverty.

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2.85 Figure 2.14 highlights relative deprivation rates across the area according to the Scottish Index of Multiple Deprivation (SIMD)22. Figure 2.14: SIMD Aberdeen City and Shire Quintiles

Source: SIMD 2009

2.86 The Scottish Government often uses a 20% threshold as the basis for identifying spatial concentration of multiple deprivation. The Aberdeen HMA (9%) and the Rural HMA (4%) both have datazones that fall below this threshold (Table 2.15). Table 2.15: Numbers and percent that are amongst the 20% most deprived in Scotland
Area Aberdeen City Aberdeenshire Aberdeen HMA Rural HMA Scotland Source: SIMD 2009 No. of Data Zones 267 301 397 172 6,505 Data Zones in most deprived 20% in Scotland 36 6 36 6 1,301 % of all Data Zones in area 13% 2% 9% 4% 20%

2.87 Within the Rural HMA these datazones are concentrated in Peterhead and Fraserburgh (Figure 2.15). These areas are the focus of ongoing regeneration programmes. Within the Aberdeen HMA the 36 datazones are mainly located in the
22

The Scottish Index of Multiple Deprivation (SIMD) is the Scottish Governments tool for identifying small areas of deprivation across Scotland. It is based on the small area geographies known as data zones.

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regeneration areas of Aberdeen City (Figure 2.16), These areas include Middlefield, Tillydrone, Woodside, Cummings Park, Northfield, Seaton and Torry. Figure 2.15: SIMD (2009) Rural HMA Areas in 20% Most Deprived

Source: SIMD 2009

Figure 2.16: SIMD (2009) ABERDEEN HMA Areas in 20% Most Deprived

Source: SIMD 2009

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Income related benefits, tax credits and poverty 2.88 The deprivation index does not provide a comprehensive picture of the prevalence of poverty. We therefore also examined trends in the number and proportion of working age people in receipt of key out-of-work benefits23 and the numbers of pensioners that rely on state retirement pension and means tested benefits. 2.89 Figure 2.17 shows that until Spring 2009, the proportion of working age population in receipt of key benefits had been falling steadily. Since September 2008 there has been some increase in the proportion of individuals in receipt of key benefits throughout Scotland and the UK. In May 2009 14,980 individuals in Aberdeen (11%) and 11,280 individuals in Aberdeenshire (8%) were in receipt of such benefits. These proportions, however, remains lower than the comparable Scottish rate of 15%. Figure 2.17: Percentage of working age persons in receipt of key out of work benefits, 2000-9

Source: DWP benefit claimants - working age client group (via Nomis 2010)

2.90 As at February 2009 there were 6,120 older people in receipt of the guaranteed part of Pension Credit in Aberdeen. The comparable number for Aberdeenshire was 6,585. Overall, 15% of pensioner households in both areas are in receipt of this benefit. Housing Benefit 2.91 Table 2.16 indicates that in May 2009, there were 24,970 Housing Benefit24 recipients in Aberdeen City and Shire, equivalent to 12% of households. Almost 80%
This measure is based on the numbers in receipt of income support, jobseeker's allowance, family credit/working families tax credit and disability working allowance/disabled person's tax credit. This measure is adjusted by the Department of Work and Pensions to reflect changes in tax credit and state benefits. 24 Housing Benefit is an income-related benefit administered by Local Authorities. People are eligible to claim Housing Benefit if they are liable to pay rent (or are treated as if they were so liable) in respect of the dwelling they occupy as their home.
23

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of Housing Benefit recipients in Aberdeen and 66% in Aberdeenshire are council tenants. The numbers and percentage of households in receipt of Housing Benefit in both local authority areas has changed little in recent years and remains well below the Scottish average. Table 2.16: Housing Benefit recipients, Aberdeen City & Aberdeenshire May 2009
All HB recipients Aberdeen City Aberdeenshire Scotland 14,820 10,150 443,130 HB recipients as % of all households in LA area 14.7% 10.3% 19.3% Rent Rebate (LA tenants) 11,490 6,540 202,280 Rent Allowance (non-LA tenants) 3,240 3,480 236,840

Source: DWP http://research.dwp.gov.uk/asd/asd1/hb_ctb/HBCTB19082009.xls

Demographic and Economic Context: Summary and Key Issues 2.92 In the 10 years to 2008 the population of Aberdeen City and Shire has increased by 2.2%. This is slightly above the Scottish average. The numbers of households have also continued to increase at a faster rate than for Scotland as a whole. In 2008 some 204,415 households lived in the area, 9% more than in 2001. Growth has been driven by in-migration. In particular there has been a significant upturn in migrants from the rest of the UK and from overseas in recent years. Declining overall household size has also contributed to household growth. 2.93 The demographic profile is becoming more orientated towards older people. In the past 10 years there has been an above average rate of increase in all age groups over 50 years, such that the age profile of the population at the Aberdeen City and Shire level is now comparable to that for Scotland. 2.94 At the housing market area level a more complex picture is evident. Within the Aberdeen HMA there has been an increase in the numbers of individuals and households moving from the city to surrounding settlements. However, since 2004 migration to the City has been at a sufficiently high level to reverse a period of population decline that occurred following the last downturn in the oil and gas industry in the late 1990s. 2.95 Aberdeen City and Shire is the most prosperous area in Scotland and one of the most prosperous in the United Kingdom. Decades of economic growth and the success of the oil and gas sector have led to a high level of efficiency and participation in the labour market. 2.96 On average households incomes across Aberdeen City and Shire are above those for Scotland and UK, and there is some evidence that earnings for many, but not all, rose sharply between 2006 and 2008. Rising earnings may be one of several factors that have contributed to rising house prices, which in turn has contributed to increasing housing affordability pressures for those in a less advantageous position in the local labour market. This issue is investigated further in chapter 4.

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2.97 Across Scotland there are disparities in deprivation rates and income levels and Aberdeen City and Shire is no exception. There is a continuing requirement to promote regeneration activities in parts of Aberdeen and in some more remote areas and former fishing reliant areas of Aberdeenshire. 2.98 After more than a decade of growth, the UK economy has fallen into recession. The economic slowdown has led to a rise in unemployment but the overall numbers in employment have so far been largely unaffected. Continued growth of the oil and gas industry has largely protected the local economy from the downturn in the UK economy but the oil and gas industry is now entering a period of consolidation. 2.99 Therefore, there are concerns that this could lead to some contraction of the labour market and further contraction of the housing market in both the Aberdeen and Rural housing market areas. The possible impacts of the macro-economic conditions, tighter lending conditions and faltering housing market confidence in the wake of the credit crunch in both the short and longer term are explored in chapter 4. 2.100 The analysis presented in this chapter poses strategic questions regarding the mix of housing that would support greater levels of urban living. Likewise, the aging of the population alongside the movement of older households into parts of Aberdeen City and Shire area, especially settlements in the Rural HMA is likely to remain an important influence on the housing market. This suggests there will remain a requirement to develop innovative and cost-effective services that can assist growing numbers of older households stay in their own home. At the same time there is a need to consider what actions may help to expand the choices for older households to move to attractive housing which is suitable for their needs. 2.101 A limitation of the present analysis is the lack of robust evidence on the savings and wealth of households. Another issue that has yet to be explored is the quality of employment and associated issues such as the rates of part time employment and seasonal employment. There is also a need to investigate the reasons for the apparent comparatively high rate of out migration and low numbers of adults aged 16-24 living in Aberdeen and if there might be a role for housing in helping to retain a younger population. These important evidence gaps are not easily addressed and will require resources and time to investigate.

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3.

The Current Housing Market

Housing Stock 3.1 The following chapter explores the housing supply trends, including the condition of the housing stock, and recent housing market dynamics. The research questions that are addressed in this chapter are: What is the current housing stock profile and how has the housing stock changed over the last 10 years? How have housing market dynamics in the private and social sectors changed over the last 10 years, What do market indicators tell us about the accessibility, affordability of housing and the extent to which the market has proved responsive to changes in demand? What are the key issues for future policy/strategy?

Stock numbers and changes over time Total stock 3.2 In 2008 there were 216,934 dwellings across Aberdeen City and Shire, with the majority of these located within the Aberdeen HMA (accounting for approximately 72% of the total). A significant proportion of the 59,127 dwelling in the Rural HMA are situated in the main settlements of Peterhead and Fraserburgh. As Table 3.1 shows, the number of dwellings in the two local authorities are very similar.

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Table 3.1: Total dwellings in Aberdeen, Aberdeenshire and Scotland, 200825

All Occupied Vacant Dwellings Dwellings Dwellings Second Homes 110,084 96% 2% 2% Aberdeen City 106,850 96% 3% 1% Aberdeenshire 216,934 Aberdeen City and Shire 96% 2% 2% 156,418 96% 2% 1% Aberdeen HMA 59,127 95% 4% 2% Rural HMA 1,900 84% 4% 12% Cairngorms NP 2,460,883 97% 3% 1% Scotland Source: Local Authority and National Figures from GROS Estimates of Households and Dwellings 2008 HMA figures from Scottish Neighbourhood Statistics Estimates of Households and Dwellings 2008

3.3 As shown in Table 3.2, between 2003 and 2008 the number of dwellings in Scotland increased by over 104,000 (+4.4%) whereas the Aberdeen HMA housing stock increased by over 8,800 (+5.6%) and the Rural HMA increased by approximately 2,700 (+4.6%). At the local authority level, Aberdeen Citys housing stock increased by 3,800 (+3.6%) whilst Aberdeenshires housing stock increased by 7,200 (+7.2%). As discussed in more detail below, the higher rate of growth in Aberdeenshire and the Aberdeen HMA reflects the comparatively high rates of new housing completions in Aberdeenshire. Table 3.2: Numbers of dwellings in Aberdeen City and Shire (20012007)25
20011 2003 2008 Change 2003-2008 3.6% 7.2% 5.3% 5.6% 4.6% 1.8% 4.4%

104,467 106,280 110,084 Aberdeen 96,578 99,654 106,850 Aberdeenshire 201,045 205,934 216,934 Aberdeen City and Shire 144,049 156,418 Aberdeen HMA 147,607 56,996 59,127 Rural HMA 56,412 1,900 Cairngorms NP 1,866 2,460,883 2,320,642 2,356,176 Scotland Source: 1 2001 Population Census Local Authority and National Figures from GROS Estimates of Households and Dwellings 2003 and 2008 HMA figures from Scottish Neighbourhood Statistics Estimates of Households and Dwellings 2003 and 2008

25

There is therefore a slight difference between the figures from the GROS used for Local Authority level and the Scottish Neighbourhood Statistics used for HMAs. This due to differences in the source and time the data is collected. GROS figures are generated from Council Tax billing systems as at September each year; however, these systems do not contain information on the types of dwellings and number of rooms per dwelling at local authority or data zone level. Instead the SNS obtain these data categories from the Assessors Portal, which provide details of Council Tax Bands and Rateable Values for all properties in Scotland. Since 2003, SNS have obtained a snapshot of the Assessors Portal as at January of each year.

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3.4 Table 3.3 shows that there were approximately 11,100 vacant dwellings spread across the area in 2001, which was equivalent to 5.5% of the total stock. In the intervening period both GROS and local Council Tax records confirm there has been a downward trend in vacant properties. GROS estimate that by 2008 the vacancy rate for Aberdeen City and Shire had fallen to 3.8%, ranging from just 3.3% in Aberdeen to around 4.4% in Aberdeenshire Table 3.3: Vacant dwellings in Aberdeen City and Shire (2001 2008)
2001 2002 2004 2006 2008 6,912 5,694 5,910 4,491 3,658 Aberdeen City 4,182 5,412 4,946 4,676 4,674 Aberdeenshire 11,094 11,106 10,856 9,167 8,332 Aberdeen City and Shire 87, 394 n/a n/a n/a 69,933 Scotland Source: Aberdeen City Council and Aberdeenshire Council Council Tax Register and for 2001 Population Census

3.5 The fall in the numbers of vacant units has been particularly pronounced in Aberdeen in recent years. Between 2006 and 2008 the number of vacant dwellings in Aberdeen fell by 833, which equated to a fall of 18.5%. 3.6 Some of the vacant dwellings across both local authority areas and both HMAs are likely to have been empty for over 12 months. It is possible that many of these dwellings require substantial investment to modernise but there is no hard evidence to investigate this matter at present. 3.7 The reduction in vacant stock supports local perceptions that new housing supply, especially in Aberdeen City, has not kept pace with housing demand. More generally, rising prices have made it financially viable to bring many private properties back into use whilst increasing numbers of social rented housing applicants has reduced void rates in even the least popular estates. House Completions 3.8 In the 10 years to 2008 the numbers of new dwellings completed in Scotland has averaged 23,000 each year. To facilitate comparisons between areas with very different population numbers, it is useful to look at completions per 1,000 households (Table 3.4 below). 3.9 Over the decade, Scotland-wide completion rates ranged from 9.2 to a high of 11.8 in 2005, with an average of 10.7 over the last five years. By comparison, the average Aberdeen City completion rate for the 5 years to 2009 was 6.6 whilst the rate for Aberdeenshire averaged 15.9. Since 2008/9 completion rates at the Aberdeen City and Scotland level have fallen sharply in the wake of the financial crisis and subsequent recession. Although there has been only a slight decline in completions in Aberdeenshire (appendix 5.a), this may simply be a matter of timing.

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Table 3.4: New build completion rates (1997 2009)

Year Aberdeen City Total Completions Completions per 1,000 households Aberdeenshire Total Completions Completions per 1,000 households Aberdeen City and Shire Total Completions Completions per 1,000 households Scotland Total Completions Completions per 1,000 households

926 9.7 752 9.7 1,678 9.2 20,695 9.7 1997 1,430 14.9 959 10.6 2,389 13.0 22,586 10.6 1998 586 6.1 1,215 9.6 1,801 9.7 20,657 9.6 1999 864 9.0 1,387 10.7 2,251 12.1 23,121 10.7 2000 775 8.0 942 10.2 1,717 9.1 22,111 10.2 2001 618 6.4 1,447 10.3 2,065 10.9 22,578 10.3 2002 599 6.1 1,345 10.3 1,944 10.1 22,747 10.3 2003 688 7.0 1,471 10.7 2,159 11.3 23,821 10.7 2004 1,002 10.2 1,768 11.8 2,770 14.3 26,468 11.8 2005 727 7.3 1,772 11.0 2,499 12.7 24,927 11.0 2006 346 3.4 1,284 10.6 1,630 8.2 24,244 10.6 2007 928 9.1 1,528 11.1 2,456 12.1 25,813 11.1 2008 258 2.5 1,509 9.2 1,767 8.6 21,028 9.2 2009 Sources: Scottish Government new build returns, Affordable Housing Investment database, GROS mid year household estimates

3.10 The level of affordable housing completions has been relatively low in Aberdeen City and Shire, with a 5 year average (2003/04-2008/09) of 10%, compared to the Scottish figure of 21% over the same period. As the effects of the economic downturn began to take hold, the number of social sector completions in Scotland picked up. However, a similar trend was not evident in Aberdeen City and Shire (see Appendix 5.b for more information). 3.11 The Scottish Government has yet to publish 2009 figures on house starts, and those for 2008 show a slight fall from a 5 year average, 2,181 to 1,991 in 2008 suggesting that Aberdeen City and Shire have not be subject to the same level of decline as the rest of Scotland. Data from National House Building Council (NHBC)26 also reflect this position with the level of starts falling from the previous 5 year average, but not as sharply as Scottish figures (Appendix 5.c). 3.12 Total housing completions in the area have averaged approximately 2,200 over the last 10 years. As Figure 3.1 demonstrates, completions have generally been stable over the period. However, rates started to dip in 2008 as a result of the financial crisis; furthermore, evidence suggests that although completions in Aberdeenshire have been marginally affected Aberdeen City has recorded approximately 50% less is expected for 2009, based on data from the NHBC.

26

It should be noted that although NHBC data is useful for triangulation, figures are based on different methodologies and numbers should not be compared directly

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Figure 3.1: Housing completions (1997 2008)

2500 Aberdeen Rural HMA 2000 No. of properties Aberdeenshire Aberdeen HMA

1500

1000

500

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Housing Development Schedules/Housing Land Audit

3.13 Within Aberdeen City and Shire, the majority of completions have been recorded within the Aberdeen HMA, accounting for 63-84% of the total between 1997 and 2008. Since 2005, the number and proportion of completions within the Rural HMA has increased from 20% in 2005 to 37% in 2008. 3.14 Analysis of the split between council areas shows that the majority of building has taken place in Aberdeenshire, contributing 73% of completions in 2008. However, the general pattern over the period reveals a 37% to 63% split for Aberdeen City and Aberdeenshire respectively. Both the number and percentage of completions in Aberdeen City has been on a generally downward trend since 1997 (from 53% in 1997 to 27% in 2008). Completions in Aberdeenshire have been more consistent since 1997 but due to the decline in completions in Aberdeen City, the proportion of completions has risen. 3.15 The level of housing starts does of course have the potential to impact greatly on the supply of new build housing both for the private and public sector housing. Data suggests that there will be a lag, in the provision of housing that could take time to return to levels of competitions traditionally experienced. This lag will be especially pronounced in Aberdeen City where levels of starts and signs of recovery are low. The extent to which developers have been holding land back and can swiftly start projects is unknown; however this will become apparent in 2010.

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Conversions 3.16 A conversion can entail remodelling a non-domestic property such as a barn, church or warehouse to provide dwellings. It can also refer to the subdivision of larger houses into smaller, often flatted properties. Occasionally dwellings are merged to form a larger dwelling, for example, where two cottages are knocked through to create a larger house. 3.17 In the last 10 years we estimate conversions have added some 2,002 dwellings to the Aberdeen City housing stock and a further 512 units to the Aberdeenshire housing stock. It is not possible at present to report on the number of conversion by HMA or tenure. Local Authority records indicate conversions have not been a feature of Council stock capital improvement programme27 or most RSL developments. This suggests that most conversions have been by private individuals or companies. Demolitions and other dwellings taken out of the housing stock 3.18 Demolitions28 have had minimal impact of the total stock numbers across Aberdeen City and Shire. Over the last ten years there were 201 demolitions in Aberdeen29 and a further 244 demolitions in Aberdeenshire30. Compared to the other three Scottish cities the rate of demolitions are very low, with Dundee recording 3,420 over the same period, Edinburgh 2985 and Glasgow 18,230. 3.19 Aside from demolitions associated with regeneration activity, most demolitions involve individual private sector dwellings. Neither local authority have ongoing or planned regeneration programmes that involve demolition activity, however, there is the possibility of 380 demolition in Aberdeen City as a result of transport improvements which, if this progresses will result in a short term upturn in demolitions in the next few years.

Source: Stock1 returns to the Scottish Government Information about houses demolished but previously reported as closed is included so that houses closed and then demolished are not twice counted as reductions in the housing stock. Also included is the number of houses taken out of housing use. Houses can go out of housing use for a number of reasons, for example through conversion to office or shops or by being used in rural area for purposes connected with agriculture, for example as a store. 29 Demolitions data is collected by the Scottish Government from data provided by the local authority. Local authority demolition figures are accurate and generally comprise the majority of activity, however authorities differ in their ability to provide information on other tenure demolitions. Figures presented here for Aberdeen City have been supplemented with local knowledge. 30 HMA demolition estimates are not available.
28

27

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Changing profile of stock over time Tenure31 3.20 Table 3.5 shows that, at the time of the 2001 Census, Aberdeen City and Shire had a higher proportion of owner occupation and lower proportion of social rented (council rented + other social rented) than Scotland as a whole. 3.21 The Rural HMA has very similar characteristics to the Aberdeen HMA, with a slightly higher proportion in owner occupation and slightly lower proportion in private rented stock. Table 3.5: Tenure of households (2001)
Aberdeen City Total N b Owner O i Council d R Other d S i l Private R Other d 97,013 61.0% 23.4% 3.5% 7.7% 4.5% Source: 2001 Census32 Aberdeenshire 89,316 71.3% 15.8% 2.8% 5.7% 4.4% Aberdeen City and Shire 186,329 66.0% 19.7% 3.1% 6.7% 4.5% Aberdeen HMA 135,080 65.7% 20.0% 3.1% 7.0% 4.2% Rural HMA 51,249 67.0% 19.3% 3.1% 5.7% 4.9% Cairngorms NP 1,420 55.9% 13.8% 3.2% 12.6% 14.6% Scotland

2,192,246 62.6% 21.6% 5.6% 6.7% 3.6%

3.22 Between 1991 and 2001 there was a marked increase in the levels of owner-occupation. In Aberdeen City, for example, the proportion of households that were owner occupiers increased from 51% to 61%. In contrast, households in the social rented sector fell from 37% to 26%. 3.23 Scottish Household Survey (SHS) estimates reported in Table 3.6 shows that from 2001 to 2005/6 the proportions of households that are owner occupiers has continued to increase whilst the proportions renting from a social landlord have continued to fall. 3.24 In addition, there has been some increase in the proportion of households renting privately, particularly in Aberdeen City. It will be important to monitor whether the percentage of households renting privately continues to increase in the wake of the downturn in the housing market and constrained access to mortgage finance.

31 32

In should be noted that the analysis of tenure uses household tenure as a proxy for stock This table uses Census tenure - rent free adjusted

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Table 3.6: Tenure of Households, 2005/06

Owner Occupied Council Rented Other Social Rented Private Rented Other Sample Size (Base) Aberdeen City 62.8% 21.3% 3.8% 10.8% 1.4% 1,236 Aberdeen shire 76.4% 10.9% 4.2% 6.1% 2.3% 1,236 Aberdeen City & Shire 69.6% 16.1% 4.0% 8.5% 1.9% 2,472 Scotland 66.1% 17.3% 7.2% 7.3% 2.1% 31,013

Note: Scottish Household Survey data is not available for the Aberdeen HMA or Rural HMA Source: Scottish Household Survey 2007/8 data at LA level not yet available

Private Rented Stock Profile 3.25 At the end of February 2010, over 17,500 landlords had registered with the two councils, covering a total of almost 21,000 properties, as set out in Table 3.7 below. Table 3.7: Private Landlord Registration
Aberdeen Aberdeenshire City 5,611 Registered Landlords 11,904 6,890 Registered Properties 13,841 Source: Aberdeen City and Aberdeenshire Council (February 2010) Aberdeen Shire 17,515 20,731 City &

Dwelling Age 3.26 It is estimated (see Table 3.8) that 22% of dwellings in Aberdeenshire were built prior to 1919, compared with 13% of dwellings in Aberdeen City and 18% in Scotland. There is also a relatively high proportion of dwellings in Aberdeenshire that were built after 1982, 31% compared with 19% and 20% in Aberdeen City and Scotland, respectively. The high proportion of the Aberdeenshire stock built post-1982 accords with the high completion rates in Aberdeenshire over the past 10 years. Aberdeen City on the other hand has a higher proportion of dwellings dating from the period (1919 1964), 43% as opposed to 19% in Aberdeenshire. Table 3.8: Dwelling age as a percentage of total stock
Aberdeen City Scotland & Shire 13% 22% 18% 18% Pre-1919 12% 5% 9% 14% 1919-1944 31% 12% 22% 24% 1945-1964 25% 29% 28% 25% 1965-1982 19% 31% 25% 20% Post-1982 Source: Scottish House Condition Survey, 2004-07 [Note data is not available for sub area. Aberdeen City Aberdeenshire

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Dwelling Size 3.27 Table 3.9 provides information on the proportion of dwellings by room numbers, for Aberdeen City, Aberdeenshire and the HMAs in 2008. It can be seen that room numbers tend to be higher within the rural locations of the region. The profile is similar in both the Rural HMA and Aberdeenshire with both having over 70% of dwellings four rooms and above, while within the Aberdeen City and Aberdeen HMA the figures are 45.0% and 53.4% respectively. Compared to national figures, Aberdeenshire and the Rural HMA have similar proportions of small dwellings (under 2 rooms), but differ for the rest of the profile, especially larger dwellings. The urban areas (Aberdeen City and Aberdeen HMA) are more similarly aligned to the national average, with the exception of small dwellings which are proportionally more prevalent. Table 3.9: Dwelling Size, 2008
Number of Rooms 1 2 3 4 5 6+ Total Number Aberdeen City 3.4% 21.3% 30.3% 20.0% 12.5% 12.5% 110,084 Aberdeen shire 1.0% 9.9% 17.3% 22.1% 20.6% 29.1% 106,850 Aberdeen City & Shire 2.2% 15.7% 23.9% 21.0% 16.5% 20.7% 216,934 Aberdeen HMA 2.7% 17.6% 26.3% 19.3% 15.2% 18.9% 156,418 Rural HMA 0.9% 10.8% 17.9% 25.5% 19.9% 25.0% 59,127 Cairngor ms NP 2.6% 11.5% 14.7% 23.6% 20.7% 26.9% 1,900 Scotland

0.8% 12.4% 29.9% 27.2% 16.7% 13.0% 2,460,883

Source: GROS 2008 Estimates of Households and Dwellings

Dwelling Type 3.28 Table 3.10 displays the dwelling types at the time of the 2001 Census. The breakdown for the Aberdeen HMA is closely aligned to the national averages with detached and semi-detached dwellings accounted for over 46% of all dwellings, and flats accounted for almost 39%. While, the proportion of flats across the Aberdeen HMA is similar to the national average, Aberdeen City has a high level of flatted accommodation, approaching half all properties. As expected the Rural HMA has a high level of detached and semi-detached (72.8%) and a low proportion of flats (13.3%).

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Table 3.10: Property Type (Households), 2001

Aberdeen City and Shire

Aberdeen City

Aberdeenshire

Aberdeen HMA

Rural HMA

Scotland

Households Detached Semidetached Terraced Flat/apartment Caravan/temp

97,013 11.8% 21.8% 16.8% 49.4% 0.1%

89,316 43.9% 30.1% 12.9% 12.6% 0.0% 0.3%

135,080 21.1% 24.7% 15.1% 38.8% 0.3% 0.1%

51,249 43.1% 28.7% 14.6% 13.3% 0.2% 0.1%

186,329 27.4% 25.8% 14.9% 31.6% 0.3% 0.1%

2,192,246 20.4% 23.5% 20.2% 35.5% 0.2% 0.1%

0.2% Shared Source: 2001 Census

3.29 GROS figures reported in Table 3.11 suggest that the level of flats in Aberdeen City has increased and in 2008 accounted for 54.4% of stock. There has also been a slight rise in the proportion of terraced dwellings. The profile in Aberdeenshire suggests a slight rise in detached dwellings, but similar proportions of other types. This updated data complements the data obtained via the census discussed above. Table 3.11: Dwellings type 2008
Aberdeen City Total Detached Semi-detached Terraced Flats Source: GROS 2008 110,084 10.7% 17.1% 17.7% 54.4% Aberdeenshire 106,850 45.6% 29.8% 12.1% 12.4% Aberdeen City and Shire 216,934 27.9% 23.4% 14.9% 33.7% Scotland 2,460,883 20.6% 19.8% 20.7% 38.3%

A more detailed look at social rented stock profile 3.30 Social rented housing in both Aberdeen HMA and the Rural HMA are supplied by both local authorities and RSLs. Local Authority 3.31 Comparison of the local authority stock of houses reveals a predominance of flatted property in Aberdeen City (76%) and the converse in Aberdeenshire (30%). This is a marked difference from the analysis of housing type for all tenure types, which has a more diverse range of housing types and far lower levels of flatted properties, Aberdeen City 54% and

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Aberdeenshire 12%. Table 3.12 identifies the number of stock each Local Authority has and how this has changed over time; Table 3.12: Local Authority Housing Stock
ABERDEEN HMA LA RURAL HMA LA Aberdeen City Aberdeenshire Aberdeen City Aberdeenshire Scotland

Stock Number 31/03/2000 Houses 7,820 11,875 28% Flats 20,009 4,250 72% All N/a N/a 27,829 16,125 100% Stock Number 31/03/2005 Houses 6,199 9,960 25% Flats 18,484 4,034 75% All N/a N/a 2,4683 13,994 100% Stock Number 31/03/2009 Houses 5,576 9,117 24% Flats 17364 3,843 76% All 26,610 9,290 22,940 12,960 100% Source: Stock1 returns to the Scottish Government, Communities Analytical Services (Housing Statistics) 2009.

74% 26% 100% 71% 29% 100% 70% 30% 100%

41% 59% 100% 44% 56% 100% 42% 58% 100%

3.32 The percentage change from 2000 to 2009 in terms of all stock reduction in Aberdeen is 18% but for houses this equates to a 29% reduction and flats 13%. For Aberdeenshire the reduction for all stock is 20% but for houses is 23% and flats 10%. The main reason for the change in stock numbers for local authority stock has been due to Right to Buy sales across all areas with far more houses sold than flats in both local authority areas. This is a similar pattern to that expressed across Scotland. 3.33 In terms of HMA changes there is no historical statistics for this geography but it is clear that the majority of housing stock is contained within the Aberdeen Housing market Area. 3.34 The following table (Table 3.13) highlights the total numbers sold of social housing sold across both Housing Market Areas. Table 3.13: Total sales for LA and Scottish Homes stock
Aberdeen Aberdeenshire Scotland ABERDEEN Rural City HMA HMA 788 353 13,841 N/a N/a 1999/00 517 334 12,537 620 231 2004/5 213 126 3,706 239 100 2008/9 Source: Stock1 returns to the Scottish Government, Communities Analytical Services (Housing Statistics) 2009.

3.35 The number of house sales is decreasing across all areas with a similar pattern emerging which is similar to Scotland as a whole. Both Local Authorities also applied for Pressured Area Designation in 2008 in order to assist in preventing future Right to Buy sales and ease the pressure of the ever growing waiting lists. Forecasts predict for this trend to continue and with changes in legislation any sales will come to a halt.

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3.36 In terms of the profile of house sizes within the social rented sector both local authorities have higher number of smaller units than larger units. Table 3.14 demonstrates the profile for each local authority, showing the change in the profile of house size due to Right to Buy. There is however, no comparable historical data prior to 2007/08 so demonstration of a meaningful trend is not possible. The concentration of housing stock in properties of between 1-3 rooms is in great contrast to the overall distribution of all tenures which has 43% of the total in this smaller property size range, see Table 3.9. Table 3.14: House Size in the Social Rented Sector
Size Aberdeen City 2007/08 No. % 935 4 7,361 31.7 10,641 45.9 4,054 17.5 187 0.8 15 0.06 23,193 100 Aberdeenshire 2007/08 No. % 73 0.5 4,965 37.9 5,335 40.7 2,582 19.7 133 1.0 4 0.03 13,098 100 2008/09 No. 922 7,317 10,511 3,993 183 14 22,940 2008/09 No. 68 4,948 5,274 2,541 130 5 12,960 % 4 31.9 45.8 17.4 0.8 0.06 100 Aberdeen HMA 2008/09 No. % 923 3.5 9,033 34 11,775 44.15 4,641 17.5 223 0.8 15 0.05 26,610 100 Rural HMA 2008/09 No. % 61 0.65 3,232 34.8 4,010 43.1 1,893 20.4 90 1 4 0.04 9,290 100

0 1 2 3 4 5+ Total

% 0 0.5 1 38.2 2 40.7 3 19.6 4 1 5+ 0.04 Total 100 0 = bedsit Source; Aberdeen City and Aberdeenshire Council records, 31/03/09

3.37 In terms in the shift in balance across available house sizes as a percentage of overall housing stock the number of smaller units is growing where the availability of larger units is diminishing. Registered Social Landlords 3.38 Within both Aberdeen City and Aberdeenshire there are 8 RSLs in operation. Data for the Housing Market areas is not currently available although systems are now in place to allow future collection of this. The issue is around some RSLs not recording data by settlement in the same format that is reported to Scottish Government i.e. self contained or non self contained units although they have this information for total numbers of units. This data will be available from 2010/11 onwards.

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Table 3.15: RSL Total Number of Units

RSL Aberdeen City RSL Aberdeenshire ABERDEEN HMA RSL RURAL HMA RSL n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Stock Number 99/00 SC n/a n/a n/a NSC n/a n/a n/a S/O n/a n/a n/a Stock Numbers 04/05 SC 3,773 3,514 n/a NSC 139 73 n/a S/O 570 219 n/a Total 4,482 3,806 n/a Stock Numbers 08/09 SC 4,030 3,800 n/a NSC 113 91 n/a S/O 443 165 n/a Total 4,586 4,227 n/a Source: Scottish Housing Regulator; APSR 2009. SC; Self contained NSC: Non self contained S/O: Shared ownership

3.39 In terms of the changes in RSL self contained stock the main reason for this is down to very little or no house sales and an ongoing development programme. The following table highlights the RSL new build completions (Table 3.16): Table 3.16: RSL New Build Completions
Area Aberdeen City Aberdeenshire ABERDEEN HMA Rural HMA Aberdeen City and Shire 1,114

505 609 877 237 1999/002002/03 245 545 690 100 790 2003/042005/06 182 325 367 14 381 2006/072008/09 932 1,479 1,934 477 2,411 Total Source: Scottish Government Housing Investment Division. Grampian Area. April 2009

3.40 There have been no new units of shared ownership units over the last 5 years and the difference in number is due to the tenants/owners increasing their share with the consequence of the tenure changing to owner occupation. 3.41 The number of non self contained units has slowly been decreasing in Aberdeen City but increasing in Aberdeenshire. A non self contained unit tends to be a shared house where each tenant has their own tenancy agreement, mainly used for clients with particular needs who require some element of housing and care support. Within Aberdeenshire the number of non self contained units has been increasing due to resettlement programmes from long term stay hospitals in the area.

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The physical condition of the housing stock Stock Condition Social Rented Stock 3.42 As well as the number of properties, overall supply is influenced by general wear and tear and investment in maintenance of the housing stock. In determining whether or not a house meets an individuals needs the quality of the house has to be considered. 3.43 The Scottish Housing Quality Standard was introduced in 2004 and applies to properties in the social rented sector. The Standard is based on a number of broad quality criteria. To meet the Standard the house must be: Compliant with the tolerable standard; Free from serious disrepair; Energy efficient; Provided with modern facilities and services; and Healthy, safe and secure. 3.44 Local authority and registered social landlord standard delivery plans contain information about the numbers of social rented homes that currently meet the Scottish Housing Quality Standard (SHQS), as well as future investment plans. 3.45 The Scottish House Condition Survey (SHCS) provides information on the Scottish Housing Quality Standard at a local authority level for all tenures and assesses whether or not private housing meets this standard even though it is not a statutory requirement to do so. The information is not available for the Housing Market areas. Stock Condition All stock 3.46 Although there is information for the SHCS since 2003 both the 2003/4 and 2005/6 survey did not assess all the necessary components included in the SHQS assessment. Therefore no comparable historical data is available although there is detail on the level of urgent disrepair across all tenures. The following table provides details from the SHCS in terms what the percentage of housing stock by tenure which meets the SHQS (Table 3.17).

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Table 3.17: SHQS Flag

SHQS Flag 2004-07 Pass 29,000 32,000 648,000 Fail % Pass 70,000 28.7 67,000 31.7 1,627,000 28 SHQS Flag 2005-08 % Pass 34.3 35.6 31.6 % Fail 71.3 68.3 72 Total 101,000 101,000 2,310,000

Aberdeen City Aberdeenshire Scotland

Pass Fail 35,000 65,000 Aberdeen City 36,000 65,000 Aberdeenshire 732,000 1,560,000 Scotland Source: SHCS 2004-2007. 2005-2008

% Fail 65.7 64.4 78.4

Total 102,000 101,000 2,320,000

3.47 In terms of all housing stock in each Local Authority area meeting SHQS Aberdeenshire is slightly higher than both Aberdeen City and Scotland. Although over the two time periods the City has shown the largest increase within the pass rate. For both Councils it is likely the reason for this is down to the number of social housing stock now meeting standard in order to meet the 2015 deadline. The majority of properties that failed SHQS failed on the energy efficiency criteria. Full central heating is a strict component of this and many properties, especially in the private sector, in both Aberdeen City and Aberdeenshire still do not have this standard. Also important is that presence of thermal insulation measures within the properties. With the use of solid wall construction in the properties in both areas this will be difficult to achieve and in some instances will never be achieved. 3.48 In terms of the social sector there is a different pattern emerging in Aberdeenshire in comparison to Scotland as there is in Aberdeen City. The proportion of the social housing stock in Aberdeenshire which meets the SHQS is higher than either Aberdeen City or Scotland. The reason for the differences lies is linked to the age of the housing stock. On the whole the stock within Aberdeenshire is not as old as much of its stock was built in 1970s as a consequence of the growing oil industry. The age profile of the housing stock in the City is similar to that of Scotland. Both Aberdeen City Aberdeenshire Councils have been able to demonstrate that they will achieve SHQS by 2015. In terms of the RSL stock within both areas they have also been able to satisfy the Scottish Housing Regulator that they will achieve this standard by 2015. 3.49 Local authority and registered social landlord standard delivery plans contain information about the numbers of social rented homes that currently meet the Scottish Housing Quality Standard, as well as future investment plans. The following table outlines key progress targets up until 2015 (Table 3.18).

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Table 3.18: SHQS Targets For Social Housing Stock

Aberdeen Aberdeenshire City RSL RSL 44 67 70 2008 39 80 76 78 2010 48 99 89 89 2012 71 100 99 99 2015 100 Source: Scottish Housing Regulator (RSL) Aberdeen City and Aberdeenshire Councils databases. Aberdeen City LA Aberdeenshire LA Scotland RSL 63 69 80 96

3.50 Another indicator that has been considered to determine trends in the quality of the housing stock is the percentage of housing stock which is in urgent disrepair across both areas. Data from 2006-08 is currently only available for all stock although it is expected tenure and property type data will be made available shortly. The following table identifies data from 2003 (Table 3.19). Table 3.19: Disrepair
Area 2003-06 % of all Private Aberdeen City Aberdeenshire Scotland 23 24 27 % of all Houses 20 23 33 % of all Public 19 22 38 % of all Flats 26 26 45 % of all stock 23 23 37 2004-07 % of all Private 22 22 37 % of all Houses 18 27 33 % of all Public 26 23 39 % of all Flats 31 25 46 % of all stock 23 27 38 200608 % of all stock 27 26 37

Aberdeen City Aberdeenshire Scotland Source: SHCS

n/a n/a n/a

n/a n/a n/a

n/a n/a n/a

3.51 An urgent disrepair is one which, if not carried out, would cause the fabric of the property to deteriorate further or place the health and safety of the resident at risk. The level of urgent disrepair in the private sector in both Aberdeen City and Shire is relatively similar and has remained so over time. This is showing a similar trend to the level meeting SHQS. In comparison to the level across Scotland it is far lower reflecting the age profile of the housing stock. Energy Efficiency 3.52 Energy efficiency can be measured using two indicators; the National Home Energy Rating (NHER) and the Standard Assessment Procedure for the Energy Rating of Dwellings (SAP). The NHER is the most commonly used in Scotland as it considers all energy use and takes into consideration climatic variations across areas. The SAP only considers energy used by heating and hot water (and lighting under SAP 2005) but does not consider area variations. For the purpose of this research NHER data is being considered.

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3.53 Energy performance certificates have been introduced which will give a property a rating ranging from A to G with A being the most efficient. Every property bought or sold or re-let will require a certificate. This of course has implications for all tenures; about 8,500 houses are sold each year in Aberdeen City and Aberdeenshire and each local authority has 1705 and 925 re-lets in 2008/09. A certificate will be required each time. In terms of the owner occupied market this was seen as a way of encouraging energy efficiency measures and the purchasers may take this into consideration when purchasing a new home. Therefore the demand for new build properties could be higher than second hand properties which are likely to have a lower rating. In terms of re-lets within the social housing sector the rating of the house would not have as big am impact on demand as the level of housing need is so high that prospective tenants do not have the ability to choose their new home. 3.54 Table 3.20 illustrates the rating from 2004/07 and 2005/08 surveys; Table 3.20: National Home Energy Rating
2004/07 Local Authority Aberdeen City Aberdeenshire Scotland 2005/08 Local Authority Aberdeen City Aberdeenshire Scotland Source: SHCS NHER score banded Moderate (3 Poor (0 - 2) 6) Good (7 - 10) 4,000 53,000 43,000 15,000 62,000 23,000 99,000 1,113,000 1,092,000 NHER score banded Moderate (3 Poor (0 - 2) 6) Good (7 - 10) 2,000 52,000 48,000 13,000 64,000 23,000 88,000 1,089,000 1,136,000 Total 101,000 101,000 2,310,000

Total 102,000 101,000 2,320,000

3.55 As expected between an urban and rural authority Aberdeenshire Council has higher percentages of housing stock with lower NHER ratings. This can be attributed to the higher number of houses than flats (houses having more outside walls and more likely to have lower ratings) and the high number of properties which do not access to mains gas. Aberdeen City data is consistent with that of Scotland in line with a similar type of dwelling pattern. 3.56 Both Local Authorities have seen a reduction in the number of properties rated poor similarly with Scotland. This is due to improvements in the owner occupied and private rented sectors (Appendix 5.d), and are likely to result from improvements in energy efficiency and new house building. Fuel Poverty 3.57 The term Fuel Poverty refers to the situation where a household cannot afford to heat their own home to a reasonable level. Scottish Government within their Fuel Poverty statement says A household is in fuel poverty if it would be required to spend more than 10% of its income on all household fuel Page 58

use. Furthermore Extreme Fuel Poverty has been defined when more than 20% is being spent on fuel. 3.58 The following table identifies the percentage of households for each area since 2003 that have been categorised as being in fuel poverty (Table 3.21). Table 3.21: Percentage of Households in Fuel Poverty
Area Aberdeen City Aberdeenshire Scotland Source: SHCS 2003-06 No 83 76 81 Yes 17 24 19 2004-2007 No 82 70 78 Yes 18 30 22 2005-2008 No 79 67 75 Yes 21 33 25

3.59 Three elements contribute whether or not a person is in fuel poverty. They are income, fuel prices and the energy efficiency of a property. Where the above table on NHER rating shows an improvement in energy efficiency the increase in fuel costs over the same period has had a negative impact of the levels of fuel poverty. The SHCS has estimated that fuel prices have risen by 13% between 2007 and 2008 but incomes by only 2%. Therefore any increases in income which may assist with reducing the number of households in fuel poverty are offset by the increases in the cost of fuel. This highlights the interaction between fuel price increases, income increases and improvements in energy efficiency. Therefore the change in fuel prices, which tend to be far more rapid have a major impact on fuel poor and therefore limit what policy makers can deliver in the short term. 3.60 Aberdeenshire has a higher incidence of households in fuel poverty which are attributed to the same reasoning which affects the energy efficiency rating; a rural authority. More houses than flats and less properties which can access mains gas. Aberdeen City has a similar profile to Scotland and the changes from 2003-06 and 2004-07 is so small that it is negligible. Whereas the increase in Aberdeenshire can be attributed to the growing number of older people in the area as well as the fuel price increases. Older people are more likely to be in fuel poverty than any other types of households. 3.61 In both Local Authorities and Scotland the level of Fuel Poverty has risen in 2005-2008 figures. This can be attributed to the rise in fuel prices and will negate any measures which have been carried out in relation to energy efficiency. Houses in Multiple Occupation (HMO) 3.62 An HMO is a residential property occupied by 3 or more persons, not being members of the same family, where it is that person's only or principal residence in the United Kingdom, and who share facilities i.e. toilet facilities, washing facilities and cooking facilities. 3.63 Aberdeenshire has a relatively low number of Houses in Multiple Occupation, with 123 licences in force at the most recent count (Table 3.22). Page 59

However, this has been increasing over the last 5 years and intelligence from officers suggests that this increase follows demand led by migrant workers who have been working in the region since 2006. This is supported by the data which shows that the growth in HMOs has generally taken place in the smaller categories of residents. Migrant workers have also had an impact in reducing the void rates within local authority stock. Table 3.22: Aberdeenshire HMO by number of occupants
Number Occupants of Aberdeenshire Number of Number of licenses licenses 2005 2006 Number of licenses 2007 Number of licenses 2008 9 36 29 32 8 1 115 Number of licenses 2009 9 38 24 38 10 4 123

3 3 6 7 4 5 11 32 5 3 14 24 6-10 15 21 25 11-20 6 8 8 21-100 2 2 1 TOTAL 34 62 97 Source: Aberdeenshire Environmental Health Department 12/2009

3.64 The numbers of HMO in Aberdeen City are, as expected considerably greater than Aberdeenshire, with 768 in 2009 to date (up to12/09) (Table 3.23). As in Aberdeenshire the numbers of applications have been increasing over the time, reaching a peak in 2007 and then declining over the subsequent years. Again this increase suggests that these HMOs could be attributed to the rise in migrant workers living in the city; however, detailed data to support this is currently unavailable. The low numbers of HMO in Aberdeenshire would indicate that this is currently not an issue. There are a larger number of HMO licenses in Aberdeen City, but to-date there has not been a detailed assessment of the concentrations of HMO licenses and if, in areas of high concentration, there is a need to limit future licenses. It is important to bear in mind the important role the HMO sector plays in providing residential accommodation for certain groups, and planning policies should not be overly restrictive. The concentration of HMOs should be monitored. Table 3.23: Aberdeen City HMO by number of occupants
Number Occupants of Aberdeen City of Number of Number of Number licenses 2007 licenses licenses 2005 2006
n/a n/a n/a n/a n/a n/a 831 Number licenses 2008 n/a n/a n/a n/a n/a n/a 669 of Number licenses 2009 324 240 137 57 4 6 768 of

3 n/a n/a 4 n/a n/a 5 n/a n/a 6-10 n/a n/a 11-20 n/a n/a 21-100 n/a n/a 384 748 TOTAL Source: Aberdeen City HMO Unit 27/10/2009

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Overcrowding 3.65 The Scottish Household Survey and Scottish House Condition Survey measure overcrowding based on the number of households that have fewer rooms than required according to the bedroom standard used in most Government surveys. Allowing for sampling error, both national surveys suggest that rates of overcrowding in the City are in line with the national rate whereas those for Aberdeenshire are below the national rate (Table 3.24). Table 3.24: Overcrowding
Aberdeenshire (%) SHCS 2003-6: 5 2 SHS 2005-6 2.7 1.6 Source: Scottish Household Survey, 2005-6 and Scottish House Condition Survey, 2003-06 Area Aberdeen (%) Aberdeen City and Shire (%) 3.3 2.5 Scotland (%) 4 2.9

3.66 Evidence from both local authority housing registers indicate that in autumn 2009 a total of 2,701 applicants were judged to be living in overcrowded conditions. However, as discussed in more detail in chapter 6 and appendix 8, the Housing Register under-reports the number of families and other households living in the private sector that experience overcrowding. 3.67 The Census suggests that in 2001 71,127 households living in Aberdeen City and shire occupied dwellings that had more rooms than required (38%) as opposed to 33% of households nationally. 3.68 There is also a marked difference between the Aberdeen HMA level of 35% and the Rural HMA 48% with a more pronounced difference between the two local authority areas of 29% in Aberdeen City and 47% in Aberdeenshire. This can be explained in part by the differences in dwelling size profile highlighted earlier in this chapter, with Aberdeenshire housing more likely to contain more rooms. The level of under-occupation, especially in the private sector households generally occurs as these households are more likely to choice to consume more spacious dwellings (Table 3.25). Table 3.25: Under Occupied Households
Area Aberdeen City Aberdeenshire Aberdeen HMA Rural HMA Aberdeen City & Shire Scotland Source: 2001 Census, Table UV059 All Households 97,013 90,736 135,080 52,669 187,749 2,192,246 Under Occupied Households 27,731 43,396 46,665 25,002 71,127 716,337 % 29% 47% 35% 48% 38% 33%

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Housing Market Activity 3.69 This chapter looks at indicators of housing market activity. The key aim of this chapter is to identify any imbalances in the housing market, either as a result of excess demand, lack of supply response or lack of demand. As it is not possible to describe precisely the exact extent of current demand, a number of indicators are examined. The research questions that are addressed in this chapter are: What do market indicators tell us about current demand in the Aberdeen HMA, particularly house prices/affordability and how effectively has the market responded to changes in demand? How has demand changed?

House sale transactions and prices Transaction volumes 3.70 Figure 3.2 shows the total number of sales for Aberdeen, Aberdeenshire and the HMAs.. These sources demonstrates that: The number of sales between 2002 and 2007 has remained relatively stable in the Aberdeen HMA33. (between 8,000-9,000 per annum) In the Rural HMA the number of sales increased from 2,569 in 2002 to 2,701 in 2007. Numbers of sales have decreased drastically in both HMAs since 2007 as a result of the financial crisis.

3.71 Scottish house sales also increased by 24,582 sales from 2002 to 2007 and declined by 47,462 from 2007 to 2008. The trend for new build sales and resales for all HMAs and Scotland have followed the same trend as total open market sales, and there has been a dramatic decline in sales since 2007.

33

There apparent dip in house sales in 2004 occurred across Scotland and it generally considered to be an error in data processing.

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Figure 3.2: Total Number of Open Market House Sales

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2002 2003 2004 2005 2006 2007 2008

Aberdeen City

Aberdeenshire

Aberdeen HMA

Rural HMA

Source: LVIU, University of the West of Scotland34

3.72 Table 3.26 shows the number of sales per 1000 households in order to provide a comparison across areas. This demonstrates that Sales in the Aberdeen City and Shire area are proportionally higher than Scotland wide sales. Sales in the Aberdeen HMA are higher than in the Rural HMA. The number of sales in Aberdeen is higher than in Aberdeenshire. Table 3.26 Sales per 1,000 households (2008)
Area Sales per 1,000 Households Aberdeen City 44.5 Aberdeenshire 38.8 Aberdeen HMA 43.9 Rural HMA 35.2 Aberdeen City and Shire 41.5 Scotland 36.9 Source: LVIU, University of the West of Scotland and GROS Household Estimates

3.73 Evidence from the Aberdeen Solicitors Property Centre for the Aberdeen HMA confirms a significant fall in residential property transactions after Quarter 1 2008.

34

Figures are for open market sales only. It is believed that there is an under reporting of new build sales contained within this data source.

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House price movements 3.74 The most comprehensive data on house prices is the data published by the Registers of Scotland, but the data has some limitations. As noted already, the data has tended to under-report new build sales in recent years. In addition it is not yet possible to use this data to explore price movements by dwelling attribute. 3.75 The following analysis is therefore primarily based on resale prices, that is properties traded in the open market and thus excluding Right to Buy sales. In addition, the analysis centres on lower, median and upper quartile house prices in an attempt to understand performance across the housing market. Lower quartile house prices are used to reflect entry level prices whilst median prices are used in preference to the more volatile average (or mean) measure of house prices. Overall price movements 3.76 Table 3.27 shows the combined re-sales and new build sales from 2002 to 2008. In all areas and across all quartiles house prices have increased every year since 2002 up to 2008. Lower quartile prices have risen by 150% in the Aberdeen HMA and have risen by 141% in the Rural HMA. 3.77 Overall house price growth in Aberdeen City and Shire has been stronger than in Scotland as a whole. But since the financial crisis in 2007 house price movements have been very similar to the Scotland wide trends.

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Table 3.27: Total Sales

Area Year No LQ Quartiles Median UQ

5965 45,000 63,000 98,000 2002 5589 48,000 71,250 112,308 2003 4451 55,000 80,000 125,995 2004 6128 65,000 95,000 150,000 2005 6626 84,054 117,000 170,000 2006 6302 115,000 152,995 220,000 2007 4536 116,000 155,000 225,000 2008 5432 52,000 75,000 111,499 2002 Aberdeenshire 4890 56,438 86,281 131,013 2003 3630 60,000 102,000 151,504 2004 4823 75,101 120,000 172,950 2005 5130 92,500 145,000 198,000 2006 5206 124,998 181,229 247,000 2007 3938 125,074 190,000 250,000 2008 8828 50,000 70,000 110,000 2002 Aberdeen 8114 54,000 81,919 127,513 2003 HMA 6306 60,000 91,000 145,000 2004 8659 71,650 110,000 165,000 2005 9174 90,000 127,341 190,000 2006 8807 122,567 169,000 243,709 2007 6453 124,925 170,000 249,950 2008 2569 43,500 62,107 93,500 2002 Rural HMA 2365 45,000 69,000 108,614 2003 1775 47,598 75,333 125,000 2004 2292 57,000 90,000 145,000 2005 2582 74,000 115,028 175,000 2006 2701 99,000 152,000 220,000 2007 2021 105,000 155,000 235,000 2008 108817 45,000 68,500 105,000 2002 107725 52,500 80,053 127,141 2003 Scotland 103415 65,000 97,000 151,500 2004 118517 74,136 110,000 165,000 2005 129578 84,000 121,500 179,950 2006 133399 95,095 137,000 196,000 2007 85937 97,500 140,000 201,000 2008 Calendar Year excluding Sales above 1 million and below 20000 Source: Source: LVIU, University of the West of Scotland35 Aberdeen

New build price trends 3.78 Following a period of steady rates of inflation, there was a dramatic increase in new build house prices at all points in the price spectrum between 2002 and early 2008. As Table 3.28 shows:
35

Annual house prices are an average of the total sales through each quarter.

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At the lower quartile point, prices in the Aberdeen HMA and the Rural HMA have increased by 167% and 178% respectively. At the median point, prices in the Aberdeen HMA and the Rural HMA have increased by 138% and 154% respectively. At the upper quartile point, prices in the Aberdeen HMA and the Rural HMA have increased by 127% and 133% respectively.

3.79 Table 3.28 shows the new build sales from 2002 to 2008. There are problems with the data for new build properties as it is suspected that data for new build properties is under reported. A comparison between Table 3.27 and Table 3.28 indicate substantial differences and may not provide a clear indication of the prices for these properties. However, in all areas and across all quartiles house prices have increased every year since 2002 up to 2008. Prices appear to be most significant at the lower end of the market.

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Table 3.28: New Build Sales

Quartiles Area Year No LQ Median UQ 473 72,995 96,450 126,498 2002 Aberdeen City 413 89,998 115,000 165,498 2003 411 99,995 127,500 182,950 2004 544 134,376 165,995 215,000 2005 803 142,500 177,000 221,995 2006 615 162,995 214,995 324,995 2007 365 198,875 242,995 305,000 2008 780 83,961 112,000 140,995 2002 Aberdeenshire 722 105,000 128,995 160,000 2003 673 124,348 152,995 177,498 2004 685 150,000 176,995 203,023 2005 711 164,000 192,000 229,000 2006 744 187,000 225,750 274,999 2007 574 212,000 249,995 300,000 2008 1127 80,250 104,995 138,495 2002 Aberdeen 991 98,000 128,995 164,500 2003 HMA 922 117,500 151,995 182,996 2004 1115 145,250 177,995 210,000 2005 1325 156,995 190,995 230,995 2006 1059 180,000 234,995 305,590 2007 707 213,995 249,995 315,000 2008 126 69,000 94,975 124,246 2002 Rural HMA 144 87,250 105,498 135,488 2003 162 104,463 126,950 159,238 2004 114 119,988 148,950 176,513 2005 189 128,025 165,000 198,250 2006 300 170,813 199,250 245,988 2007 232 191,988 241,475 264,700 2008 14256 76,950 102,283 135,000 2002 14172 91,000 125,000 165,000 2003 Scotland 15780 106,500 145,000 188,000 2004 16732 122,950 162,889 206,950 2005 18974 131,950 174,000 220,000 2006 20089 141,950 185,000 237,000 2007 14006 146,995 190,000 248,000 2008 Calendar Year excluding Sales above 1 million and below 20000 Source: Source: LVIU, University of the West of Scotland36

Resales price trends 3.80 Following a period of steady rates of inflation, there was a dramatic increase in resale house prices at all points in the price spectrum between 2004 and early 2008. As Table 3.29 shows:

36

Annual house prices are an average of the total sales through each quarter.

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the Scottish lower quartile house price increased by 111% between 2002 and 2008 whilst prices in the Aberdeen HMA and the Rural HMA have increased by 155% and 133% respectively. at the median point the Scottish house price increased by 103% whilst the prices in the Aberdeen HMA and the Rural HMA increased by 146% and 141% respectively. at the upper quartile point the Scottish house price increased by 93% whilst the prices in the Aberdeen HMA and the Rural HMA increased by 135% and 139% respectively.

3.81 Across Aberdeen City and Shire increases have been greatest in upper quartile prices, 161% compared to 157% in the lower quartile. This is contrast to figures for Scotland where inflation has been greatest in the lower quartile, 111% compared to 93% in the upper quartile house price. 3.82 Nonetheless, by 2008 the entry-level house price in both local authority areas and the two HMAs was considerably higher than for Scotland as a whole: Aberdeen and Aberdeenshire entry level prices were 25% and 33% higher than the Scotland wide entry level price. Aberdeen HMA and Rural HMA entry level prices were 30% and 9% higher than the Scotland wide entry level price.

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Table 3.29: Sasines Resale House Prices, 2002 - 2008

Aberdeen Rural HMA HMA lower quartile 2002 44,000 50,000 47,000 43,000 2003 46,554 52,500 50,790 44,472 2004 53,000 58,000 57,003 45,328 2005 63,000 70,050 68,500 55,000 2006 80,000 86,317 85,000 71,525 2007 111,739 120,000 120,000 95,000 2008 115,000 122,000 120,000 100,000 Median 2002 60,000 70,000 65,000 60,000 2003 68,000 79,700 75,000 64,000 2004 75,255 89,000 82,500 70,000 2005 90,000 108,000 98,151 85,000 2006 108,000 130,000 120,000 108,000 2007 145,145 172,000 160,000 143,322 2008 148,000 175,000 160,000 145,000 upper quartile 2002 94,000 100,000 100,000 90,000 2003 107,000 121,000 116,833 102,000 2004 118,000 134,000 128,545 115,000 2005 137,000 159,900 150,000 140,000 2006 155,000 187,000 172,766 170,000 2007 208,443 240,000 231,000 214,825 2008 210,000 247,000 235,000 215,000 Source: Source: LVIU, University of the West of Scotland37 Aberdeen City Aberdeenshire Scotland

43,550 50,000 60,000 70,000 80,000 90,500 92,000 63,000 75,000 90,000 99,500 113,500 125,000 128,000 97,000 118,534 140,000 152,000 166,000 185,000 187,000

3.83 Since the latter part of 2007 and the downturn of the UK housing market in the wake of the global financial crisis, house prices in the area have fluctuated, but have remained substantially higher than those for Scotland as whole. Sasines figures for 2009 are not yet available, but: Figures from the ASPC Housing Market Bulletin 2009, (see Figure 3.3) demonstrate that since Q1 2009 average prices in the Aberdeen have been increasing. Qualitative feedback from estate agents and other housing professionals suggest house prices have began to rise, albeit at a modest rate relative to recent and underling price trend. The recent upward trend may reflect a combination of: o Renewed market confidence, which may be linked to the fact that job losses have not really materialised in local area o Lack of new housing supply

37

Annual house prices are an average of the total sales through each quarter.

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o Lack of resale supply because many owners are reluctant to sell for fear of locking in the losses of the past year Figure 3.3: Average Price, Aberdeen, Scotland and UK
250,000

200,000

150,000

100,000

Aberdeen HMA 50,000 Scotland UK

0 1Qtr06 3Qtr06 1Qtr07 3Qtr07 1Qtr08 3Qtr08 1Qtr09 3Qtr09

Source: ASPC Housing Market Bulletin 2009 data for Aberdeen HMA and Halifax House Price Index Seasonally adjusted figures for Scotland and UK http://www.lloydsbankinggroup.com/media/excel/09_03_10_Historic_Data.xls

Lower quartile re-sales 3.84 The following paragraphs look in more detail at price movements at the entry-level end of the market, which is commonly understood to be represented by the lower quartile resale price. Figure 3.4 reports lower quartile house price trends from 2002 to 2008 and shows that: Prices in the Aberdeen HMA were comparable to the equivalent Scotland wide price from 2002-2006, but prices are now 28,000 higher. These figures may be a result of a higher demand in the HMAs and/or a failure of the market to supply levels of housing in line with the Scottish average. The Rural HMA lower quartile price was below the equivalent Scotland wide price between 2002 and 2006 but by 2008 was 8,000 higher. These figures may be a result of a higher demand in the HMAs and/or a failure of the market to supply levels of housing in line with the Scottish average.

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Figure 3.4: Resale Lower Quartile House Prices

140,000 120,000 100,000 80,000 60,000 40,000 20,000 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 2002 2003 2004 2005 2006 2007 2008
Aberdeen City and Shire Rural HMA Aberdeen HMA Scotland

Source: LVIU, University of the West of Scotland

3.85 At the local authority level, entry-level house prices have risen more sharply in Aberdeen, especially since 2005. In 2002 the lower quartile price for Aberdeen was just 1,000 more than the comparable Scotland wide price point. By 2008 this difference had increased to 23,000. 3.86 The sharp increases in prices can be attributed, partly, to the demographic and economic changes in the area. The key factors that may have influenced the increase in price are: Over the past 5 years there has been significant in migration leading to a population increase, and more importantly an increase in the number of households. The economy of the area has remained one of the most boyant local economies in the UK, driven by the oil and gas sector. Between 2006 and 2008 the price of Brent crude oil increased from $30 per barrel to over $140. New house completions have not increased to respond to demand; and New build lower quartile prices have risen faster than either the median or upper quartile prices. 3.87 Nonetheless, lower quartile prices in Aberdeen remain below the comparable price point for Aberdeenshire. One reason for this difference is the different mix of properties available for sale across the two local authority

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areas. The lower end of the housing market within the City tends to be dominated by flats whilst the lower end of the market in Aberdeenshire, especially in the Rural HMA, tends to comprise of houses. Private renting activity 3.88 Data on rents and turnover in the private rental sector remains underdeveloped both nationally and locally. The following paragraphs therefore draw on several sources of data to build some picture of the active private rental market, which include: Citylets, who advertise over 45,000 properties a year on behalf of 200 letting agents38 across Scotland39. It provides some insight into advertised private rents in and around Aberdeen but not Aberdeenshire. Citylets has only been producing reports since 2007. A small survey of letting agents websites in August 2008 in order to get a snapshot of advertised rent levels for different types of properties Interviews with solicitors, estate agents and landlords. Local Housing Allowance (LHA) rates used to calculate housing benefit entitlement

3.89 Citylets evidence suggests that there has been some downturn in the average private rent advertised both locally and nationally in the wake of the economic downturn. However, Citylets data reported in Figure 3.5 indicates that rents in and around Aberdeen remain higher than elsewhere in Scotland, including Edinburgh and Glasgow.

38

Landlords with properties focused on the higher and middle end of the market are more likely to use letting agents; therefore the data from Citylets may tend to reflect a higher average rent than is actually the case. 39 Data is for Aberdeen City is unavailable due to commercially sensitivity; however the Citylet analysis for Aberdeen is statistically significant and based on several thousand annual transactions.

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Figure 3.5: Trends in Scottish Rents

3.90 Table 3.30 shows the Citylets.co.uk advertised average market rents by dwelling size from Q1 2007 to Q4 2009 in Aberdeen. Over this period as whole the rents for 1 and 4 bedroom dwellings have increased whilst rents for 2 and 3 bedroom dwellings have fallen. However, there has been much fluctuation in advertised rents over this period, which makes it difficult to draw firm conclusions about the general direction of private rents Table 3.30: Average monthly market rents, Aberdeen City
1 Bed 2 Bed 3 Bed Q1 07 484 835 Q2 07 507 809 Q3 07 515 813 Q4 07 544 825 Q1 08 544 821 Q2 08 559 821 Q3 08 573 817 Q4 08 573 810 Q1 09 566 797 Q2 09 551 767 Q3 09 540 764 Q4 09 547 809 % Change 13.0% -3.1% Source: Citylets.co.uk reports http://www.citylets.co.uk/reports/ 4 Bed 1,110 1,165 1,002 1,066 1,166 1,163 1,110 1,089 1,105 1,101 1,169 1,106 -0.4% 1,651 1,644 1,689 1,774 1,764 1,730 1,725 1,624 1,688 1,701 1,524 1,725 4.5%

3.91 Local Housing Allowance (LHA) figures for December 2009 are summarised in Table 3.31 below. It is clear is that the average rent for properties advertised through Citylets exceed the LHA limit, especially for large properties.

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Table 3.31: LHA Limits

1 Room Shared 1 Bed 2 Bed 3 Bed 4 Bed 5 Bed 300 500 650 750 1,000 1,250 Source: http://www.scotland.gov.uk/Topics/Built-Environment/Housing/PrivateRenting/rentregistration-service/setting-lha/Figures

3.92 Feedback from estate agents and solicitors that operate across the Aberdeen HMA indicate that rental levels reported through Citylets are consistent with their own records. 3.93 In the wake of the housing market downturn, estate agents and solicitors report there has been an increase in the supply of private rental properties. Interviewees indicate that not only have owners chosen to rent out a property rather than sell in a depressed market but also that buy to let investors have chosen to hold onto their properties for the time being. 3.94 Estate agents and solicitors also indicate there has been increased demand because of prospective first time buyers being unable to secure mortgage finance or raise the necessary deposit. In particular there is a widespread consensus that demand and competition for 1-bedroom properties remains very high 3.95 The student market has a significant impact on the demand for rental properties in Aberdeen, with the annual summer turnover creating an increased demand for rental properties, and in particular within close proximity to the University of Aberdeen. This annual summer turnover reduces the number of flats available at other times of the year for re-let. 3.96 It is more difficult to obtain a comprehensive picture of turnover, and rents in the Rural HMA private rented sector. Comparatively few private lets are advertised, and many properties are leased without advertising and therefore have not been picked up in our assessment of rent levels. 3.97 The typical rent ranges reported by one leading factor who manages a substantial housing stock portfolio on behalf of several landlords within the Rural HMA, (approximately between 500-600 houses), are reported in Table 3.32. These rental costs are significantly lower than in the Aberdeen HMA. These rents are also lower than the Local Housing Allowance levels but it is important to stress that it is difficult to know how representative these figures are. Table 3.32: Rural HMA Rental Costs
1 Bed Rent () 300-350 Source: Factor Interviews December 2009 2 Bed 500-600 3 Bed 650-700 4 Bed 800-1000

3.98 Landed estates and other private landlords that operate in the Rural HMA may not always seek to charge full open market rents because they may

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have wider motives for renting, such as providing accommodation for local employees, and other local households to help sustain local communities. 3.99 Turnover of private lettings in the Rural HMA are reported to be very low and it is common for tenancies to last for 7+ years. It is not uncommon for generations of families to continue to live in the same property or for families to remain with the same landlord but to move house as their family circumstances change. The long-term nature of these relationships are likely to exert a downward pressure on rents. 3.100 Private landlords that we interviewed confirm there is considerable demand for housing. They also indicate that informal networks are commonly used to re-let vacated property but many 'manage' some form of waiting list. 3.101 These interviews support the Strategic Housing Market Partnerships perception that private renting play a pivotal and distinctive role in parts of rural Aberdeenshire, especially in localities where social renting is largely or wholly absent. However, low turnover rates means opportunities for prospective tenants can be very limited. 3.102 Overall, there is a lack of robust and routinely updated evidence concerning the operation of the private rented sector across Aberdeen City and Shire. This is a data gap that the Strategic Housing Market Partnership may wish to see addressed in the future. Affordability of entry level prices and private rents 3.103 Affordability analysis provides information about which locations and types of property are accessible to local people and which are the most difficult to afford. Poor affordability can lead to excess commuting and unsustainable travel patterns, a loss of workers in the area, high dependence on social housing or housing benefit, health problems, poverty and homelessness. All neighbourhoods will vary in their affordability but this concept is most readily assessed at the HMA and local authority area level. Interest Rates 3.104 Housing demand is driven by factors aside from price. These factors include but are not limited to household income and wealth, which were discussed in the economic profile section, and the cost of borrowing.

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Figure 3.6: Bank of England Base Rates, (March 1999-march 2010)

7 6 5 4 3 2 1 0 04/01/99 04/01/00 04/01/01 04/01/02 04/01/03 04/01/04 04/01/05 04/01/06 04/01/07 04/01/08 04/01/09 04/01/10

Source: Bank of England

3.105 As shown in Figure 3.6 interest rates fell from around 6% in 1999 to less than 4% in 2003, before rising again to reach almost 6% in 2007. The Bank of England began to cut interest rates aggressively towards the end of 2008 and by March 2009, the Bank of England base rate was just 0.5%, and has remained at this level for the past year. 3.106 Historically mortgage rates have tended to follow fluctuations in the bank rate, but have been somewhat higher in recent months. Since the latter half of 2008 the gap between these two rates has widened. Over the last 12 months mortgage interest rates, especially for first time buyers have ranged from 3.5% to 5.5%, whilst the average rate on a two-year fixed rate deal has averaged 4.7%. 3.107 Low interest rates help to ensure mortgages remain affordable for the large majority of existing borrowers. However, in spite of some fall in house prices, prospective first time buyers still face affordability problems, not least because mortgage lenders have become more cautious about who they lend to and how much they lend. During 2008 and 2009 mortgage companies often required deposits of up to 20% or more. Recent announcements by lenders suggest that mortgage finance is now becoming more freely available. However, as discussed in chapter 4, until the wider UK economy and employment situation settle down it is unlikely that large numbers of first time buyers will return to the market.

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Affordability of entry level owner occupation 3.108 The Scottish Government suggest that a household should be considered able to afford to buy a home if it costs no more than 3.5 times the gross household income for a single earner household or 2.9 times the gross household income for dual income households. Taking this as a benchmark, Table 3.33 compares lower quartile price to lower quartile and median earnings for the Aberdeen HMA. Table 3.34 repeats this analysis for the Rural HMA. Tables for Aberdeen and Aberdeenshire can be found in Appendix 5.e and Appendix 5.f. Ratios highlighted in red are those considered not to be affordable. Table 3.33; Aberdeen HMA house price to earnings ratios
Single Earner dual earner Sasines Resale Price40 lower quartile Median lower quartile X2 Median X2 lower quartile Median 2002 15,184 22,984 30,368 45,968 47,000 65,000 2002 LQ price/LQ Earnings LQ price/median Earnings 3.10 2.04 2003 15,600 23,036 31,200 46,072 50,790 2004 15,964 22,100 31,928 44,200 57,003 2005 17,420 24,388 34,840 48,776 68,500 2006 18,460 25,012 36,920 50,024 85,000 120,00 0 2006 4.60 3.40 2007 17,524 24,908 35,048 49,816 120,00 160,00 0 2007 6.85 4.82 2008 19,136 27,664 38,272 55,328 120,00 160,00 0 2008 6.27 4.34

75,000 82,500 98,151 PRICE: INCOME RATIO 2003 2004 2005 Single Earner 3.26 3.57 3.93 2.20 2.58 Dual Earner 2.81

LQ price/LQ Earnings 1.55 1.63 1.79 1.97 2.30 3.42 3.14 LQ price/median 1.02 1.10 1.29 1.40 1.70 2.41 2.17 Earnings Sources: LVIU, University of the West of Scotland for resale prices and ASHE workplace earnings for LQ earnings

40

Annual house prices are an average of the total sales through each quarter.

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Table 3.34: Rural HMA house price to earnings ratios

Single Earner dual earner Sasines Resale Price lower quartile Median lower quartile X2 Median X2 lower quartile Median 2002 13,364 19,396 26,728 38,792 43,000 60,000 2003 14,144 19,448 28,288 38,896 44,472 2004 14,664 20,124 29,328 40,248 45,328 2005 14,872 19,916 29,744 39,832 55,000 2006 15,340 22,516 30,680 45,032 71,525 108,00 0 2006 4.66 3.18 2007 16,380 23,920 32,760 47,840 95,000 143,32 2 2007 5.80 3.97 2008 17,316 24,336 34,632 48,672 100,00 145,00 0 2008 5.78 4.11

LQ price/LQ Earnings LQ price/median Earnings

64,000 70,000 85,000 PRICE: INCOME RATIO 2002 2003 2004 2005 Single Earner 3.22 3.14 3.09 3.70 2.22 2.29 2.25 2.76 Dual Earner

LQ price/LQ Earnings 1.61 1.57 1.55 1.85 2.33 2.90 2.89 LQ price/median Earnings 1.11 1.14 1.13 1.38 1.59 1.99 2.05 Sources: LVIU, University of the West of Scotland for resale prices and ASHE workplace earnings for LQ earnings

3.109 The key trends that are shown by Table 3.33 and Table 3.34 are: Affordability pressures and have increased since 2002, and especially since 2005. Although there was a slight easing of affordability pressures during 2008, this may have been overturned by the increase in house prices during 2009. Affordability pressures in the Aberdeen HMA are more severe than in the Rural HMA. In 2008, a single, lower quartile earner looking for a lower quartile property would have to pay 6.27 times their annual salary in the Aberdeen HMA and 5.78 times their salary in the Rural HMA. Within both HMAs, entry-level priced housing is no longer affordable to households that rely on one wage earner who earns less than the median local wage. It is also evident that dual earner households at the lower end of the earnings distribution are likely to face affordability barriers to buying an entry level priced dwelling.

3.110 As discussed in the economic profile section, however, many households do not contain one or more people in full time employment. The above analysis was therefore replicated using CACI income estimates for 2008, which are based on total household incomes. Table 3.35 below indicates that: House prices are well above affordable levels for both lower quartile household incomes and median household incomes. Using CACI data it indicates that the average lower quartile household income is lower than a dual income, as presented in the house price to earnings ratio analysis above. This indicates that prices for the average

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lower quartile household will be 6.35 times earnings in the Aberdeen HMA and 5.51 in the Rural HMA. This also indicates that there are affordability constraints for those on median incomes, especially in the Aberdeen HMA where it unaffordable for a median income household to purchase a lower quartile property.

Table 3.35: House Price to Earnings

Median Lower quartile LQ Median Aberdeen HMA 32,499 Rural HMA 28,661

2008 CACI income

18,900 18,142 120,000 100,000 Sasines Resale Price 160,000 145,000 LQ price/ LQ earnings 6.35 5.51 LQ price / Median Income 3.69 3.49 Mediam price / Median earnings 4.92 5.06 Source: LVIU, University of the West of Scotland data for resale prices and CACI Paycheck for median incomes

3.111 However, it should be recognised that, with the changes to lending practices over the past 18 months (the requirement for a good credit history, a significant deposit and a higher rate of interest when deposits are lower) being able to afford repayments is not enough to secure a mortgage. These factors are likely to limit the ability of households to access owner occupation. 3.112 Figure 3.7 also illustrates the variability of affordability pressures across Aberdeen City and Shire. It shows CACI paycheck median income figures for 2008 to entry-level 2008 price ratios. Median income has been used because lower quartile income data is not believed to be very reliable, especially for less populated areas. It shows that: Looking across both HMAs the Torry West area is the only area where prices appear affordable. This is an area where there is large share of social renting and thus lower prices. Torry East is identified as having affordability constraints and is made up of a large proportion of City Council housing stock that has seen recent investment over the past 10 years. Whereas the west is made up of more private dwellings in poorer condition. Therefore, while cheaper and more affordable, they may not necessarily meeting the needs of occupants. Affordability pressures are somewhat less severe in Peterhead, Fraserburgh and the surrounding areas. At the other extreme there are some areas in the Rural HMA that have major affordability pressure. The areas of the Deeside corridor and areas slightly further north, for example Cromar are very unaffordable. In addition the areas around Insch and Chapel of Garioch are also very unaffordable. The Mearns and Laurencekirk area is also very unaffordable. This area does not suffer from the high prices in Deeside, but incomes are lower in the area.

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Within the Aberdeen HMA the affordability constraints on the Deeside corridor continue right up to Cults. In addition to Cults, Bieldside, Milltimber and Peterculter other areas to the West of Aberdeen around Mannofield are very unaffordable.

Figure 3.7 Affordability 2008

Source: 2008 Median income from CACI paycheck 2008 Lower quartile house price from LVIU, University of the West of Scotland

Affordability of private rents 3.113 The Scottish Government suggest that, in terms of assessing affordability, rents should not exceed 25% of gross household income. This section provides an analysis of affordability of rents in Aberdeen, the Aberdeen HMA and the Rural HMA. There is no comprehensive monitoring of rents across Aberdeen City and Shire and different sources for rental prices are used for each analysis of affordability. All figures are based on ASHE 2008 earnings and a comparison to the 2008 CACI Paycheck data is included. The rental values of a 2 bed property have been used as the core indicator. The analysis of affordability of rents is contained in Appendix 5.g to Appendix 5.h, and the conclusions from this data are: In Aberdeen rental prices are very high, and 2 bed properties are only affordable to a dual median income household. Single lower quartile earners would be expected to pay 50.8% of their earnings on rent. Page 80

The affordability of rental prices in the Aberdeen HMA as a whole are not much improved on Aberdeen City. Single lower quartile earners would be expected to pay 50% of their earnings on rent. Rental prices in the Rural HMA are lower than the Aberdeen HMA, and are more affordable. However, single lower quartile earners would be expected to pay 34.5% of their earnings on rent. Using the lower quartile CACI data as a comparison shows similar trends in affordability. In the Rural HMA two bed properties will cost 36.4% of gross household income and in the Aberdeen HMA two bed properties will cost 46.8% of gross household incomes. Using the Median income CACI data as a comparison shows similar trends in affordability. In the Rural HMA two bed properties will cost 23% of gross household income and in the Aberdeen HMA two bed properties will cost 28.3% of gross household incomes.

3.71 Comparison of entry level house price and costs with private rental costs 3.72 Table 3.36 estimates the potential monthly cost a prospective first time purchaser might face when purchasing a lower quartile property. We calculated the monthly cost of a mortgage based on an assumed mortgage interest rate of 4.7% and an assumed repayment period of 25 years. It was also assumed that a deposit of 17% would be paid, based on average deposits for first time buyers. To translate this into a weekly cost, we simply multiplied the monthly sum by 12 and divided by 52. 3.73 It is useful to compare this to the LHA41 for people paying rent for a 2 bedroom dwelling. The LHA for Aberdeen City and Shire was set at 150 in 2008. This comparison shows that: Rural HMA cost of purchase, in terms of weekly payments, is much lower than LHA rent and falls within rent range of bigger landlords. The weekly payment on a lower quartile property is 107 compared to a LHA of 150. The cost of purchase and the LHA in the Aberdeen HMA are more comparable, 126 and 150 respectively, but this is bearing in mind that: o These are repayment costs and the weekly mortgage payment would be considerably lower if the purchaser opted for an interest only mortgage. o There are potentially cheaper mortgage rates available.

3.74 Therefore, the Strategic Housing Market Partnership agreed to base the central estimate of housing need on cost of entry level price for owner occupation alone.

LHA is based on median rents for a property size from information collected by the Rent Registration Service

41

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Table 3.36: Monthly Cost of Property for First Time Buyer

2008 figures monthly Weekly charge at 4.7% payment over 25 years Aberdeen City 110,000 91,300 524 121 Aberdeenshire 120,000 99,600 571 132 Aberdeen HMA 115,000 95,450 548 126 Rural HMA 97,500 80,925 464 107 Source: Lower quartile house prices from LVIU, University of the West of Scotland entry price Price minus 17% deposit

Consumer housing expectations and requirements 3.114 In 2009 a Home Buyers Survey42 was undertaken by the Strategic Housing Market Partnership to gain some insight into the factors that influenced the purchase decisions of households that have recently moved house. 3.115 Of the 1,144 survey respondents, 20% were first time buyers. A further 23% were outright purchaser. Some 66% of respondents indicated their household had a gross annual income in of 25,000+ per annum. A further 16% reported an annual income of below 25,000 and 18% did not wish to answer. 3.116 Households move for a complex mix of reasons, but across both HMAs, the desire for a larger property was the single most common reason for moving house (Table 3.37). Overall, a quarter of respondents stated this was their main reason for moving, rising to around 3 out of 10 households with children. As expected those seeking smaller properties were almost all older households. Table 3.37: Reasons for Moving
Reason Aberdeen Rural All HMA (%) HMA (%) Larger property 24 21 Change of location 10 10 Change in job location 11 8 First time buyer 10 8 To be near friends or relatives 4 8 Marriage or cohabitation 5 8 Smaller property 6 6 Relationship breakdown 7 4 Change in household size 3 3 Retirement 2 6 Condition of previous house 0 1 Disability 1 1 Other 4 5 Source: Aberdeen City and Shire Homebuyers Survey 2009 23 10 10 9 6 6 6 6 3 3 1 1 5

3.117 The Survey sought to identify if the downturn in the housing market had influenced house purchase. As Table 3.38 indicates, of the 470 purchasers
42

Drawn from SASINES house purchasers from 2006,2007 and 2008 see appendix 3 for further information

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that had bought property after September 2007, 59% indicated market conditions had no effect, although fewer first time buyers stated this to be the case. As this sample only includes households that have been successful in purchasing a home this finding must however be treated with caution. 3.118 Conversely over a quarter of first time buyers said they had been required to increase the deposit and 14% of subsequent buyers indicated they had experienced some difficulty in selling their previous property. Table 3.38: Impact of Financial Crisis on house buying decision making
Statement First Time Buyer Subsequent Buyer 6% 9% 11% 14% 4% 6% 61% Changed the size of property you were 9% looking for Changed the location you were searching 6% in Increased deposit was required 26% Difficulty in selling previous property 3% Difficulty in obtaining finance for the new 8% property Other 7% No effect 51% Source: Aberdeen City and Shire Homebuyers Survey 2009

3.119 In terms of locational preferences, Table 3.39 indicates that four factors exert most influence on purchaser decisions. A fifth stated that a good environment was their main consideration, although this is less frequently cited by those purchasing in the Rural HMA. The other important factors were price, dwelling design and/or size and proximity to friends and relatives, the latter of which tended to be more frequently cited by those purchasing in the Rural HMA. Interestingly, good commuting to Aberdeen was not a factor in choosing where to live in the Aberdeen HMA. This is perhaps not surprising as the Aberdeen HMA is quite tightly defined and most localities are within reasonable proximity of the City. Table 3.39: Reasons for Choosing and Area
Reason Good Environment House prices Design, type or size of houses To be near friends or relatives Close to work Looking for rural lifestyle To be near shops, schools, leisure and other amenities Choice or quality of school 5 1 Good commuting to Aberdeen 3 1 Good transport links 1 1 Other 3 4 Not answered 6 7 Source: Aberdeen City and Shire Homebuyers Survey 2009 Aberdeen HMA (%) 22 17 13 11 10 4 5 Rural HMA (%) 13 17 16 20 5 13 1 All 19 17 14 14 9 7 4 4 3 1 3 6

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Demand and supply in the social rented sector 3.120 The availability of social housing can be measured in terms of the number of homes within the social rented sector and how often a property becomes available to let. The other measure of activity within this tenure is the actual number of applicants on the housing list who have applied for a social rented house but also their level of housing need. For example, if there are 100 social rented houses in a town and 5 become available for rent in one year then the turnover rate would be classed as 5%. But this has to be considered in the context of 100 applicants on the housing list. If the turnover rate was consistent or seen to be decreasing then the pressure on the social rented market would be extreme. The data is only available by Local Authority area and not housing market areas. Table 3.40 demonstrates the number of re-lets across both Council areas; Table 3.40: Re-lets
Aberdeen Aberdeen Scotland City Aberdeenshire HMA Rural HMA 53,187 3,014 1,583 N/a N/a 2001-02 52,535 2,782 1,542 N/a N/a 2002-03 39,136 2,905 1,522 N/a N/a 2003-04 33,883 2,650 1,246 N/a N/a 2004-05 31,822 2,683 1,162 N/a N/a 2005-06 30,022 3,326 1,115 3,605 836 2006-07 26,881 2,234 895 2,464 665 2007-08 24,737 1,705 927 1,927 705 2008-09 Source: Lettings returns by local authorities to the Scottish Government, Communities Analytical Services (Housing Statistics). Aberdeenshire Council statistics

3.121 In line with Scotland the number of re-lets across both areas has been falling over the last 8 years, by 43% in Aberdeen City and 41% in Aberdeenshire. But the decline is more noticeable in the Aberdeen Housing Market Area rather than the Rural Housing Market Area. 3.122 Taking into consideration the number of housing units in each area, turnover rates are identified in the following table; Table 3.41: Local Authority Housing Turnover (%)
Aberdeen Rural Aberdeenshire HMA HMA N/a N/a 2002 10.4 11.4 10.5 N/a N/a 2003 13.3 10.8 10.5 N/a N/a 2004 10.6 11.5 10.6 N/a N/a 2005 9.6 10.7 8.9 N/a N/a 2006 9.3 11.1 8.5 N/a N/a 2007 9.2 14.1 8.3 2008 8.6 9.6 6.8 7.2 7.6 2009 7.9 7.4 7.2 N/a N/a Source: Stock 1 and lettings returns by local authorities to the Scottish Government, Communities Analytical Services (Housing Statistics). Aberdeenshire Council statistics Scotland Aberdeen City

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3.123 Aberdeenshire much like Scotland has shown a consistent downward trend in its turnover rate of social housing stock. It has also been below the Scottish average for a number of years. In comparison, the turnover rate in Aberdeen City has remained reasonably constant. However, there was an unusually high turnover rate in 2008 and 2009 was an exception in the Citys figures. Historical data is not available to calculate turnover rate buy Housing Market Areas but in 2009 the rates for each Housing Market Area is similar to that for each of the Local Authority areas. 3.124 The other factor affecting market activity is housing waiting lists. For both Aberdeen City and Aberdeenshire the number on the housing lists has been increasing steadily over the last few years. In terms of figures for the Aberdeen Housing Market Area this might over estimate by 10-15% as applicants could be registered both with Aberdeen City and Aberdeenshire Councils. It is not possible with current systems to identify how much the overlap will be. Table 3.42 illustrates this trend; Table 3.42: Housing Lists
Scotland Aberdeen City Aberdeenshire5 Aberdeen HMA Rural HMA N/a N/a N/a N/a N/a N/a 3,476 692 4,168 2002 N/a Waiting List 4,359 2,603 126,300 N/a Transfer list 4,042 1,034 69,500 N/a Total 8,401 3,637 195,835 2005 N/a Waiting List 7,031 4,058 109,400 N/a Transfer list 5,284 1,188 81,700 N/a Total 12,315 5,246 191,075 2009 Waiting List 4,307 6,951 7,782 118,400 Transfer list 4,285 1,033 4,626 81,200 Total 8,592 7,984 12,408 199,554 Source: Lettings returns by local authorities to the Scottish Government, Communities Analytical Services (Housing Statistics). Aberdeenshire Council Statistics

3.125 The trends in housing lists vary across both areas. Aberdeenshires waiting list has been steadily increasing every year with over 100% increase since 2002. Aberdeen City has shown a different pattern with a steady increase from 2002 to 2005 and then steadily decreasing to 2009. In comparison Scotland has had a steady increase since 2003 but no where near the rate of increase Aberdeenshire has shown. 3.126 Another noticeable difference is the split between waiting list and transfer list applicants. In both Aberdeenshire and Scotland there are far more waiting list applicants than transfer applicants. In terms of Aberdeenshire the proportional split has increased from 71% of applicants on the waiting list in 2002 to 87% in 2009. In terms of Scotland this has always been around 60% and in Aberdeen City around 50%.

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3.127 From this analysis it would suggest that there is an imbalance in the social housing stock in relation to the tenants who live in them in Aberdeen City. By contrast the issue in Aberdeenshire seems to be around supply available for new housing applicants. 3.128 Taking into account both turnover and waiting list figures and using the indicator already established in agreeing Pressured Area Designation the following table identifies the waiting list: re-lets ratio (Table 3.43). Table 3.43: Waiting Lists : Re-let Ratio
Scotland Aberdeen City 8,401 3,014 2.8:1 2005 W/L Relet Ratio W/L Relet Ratio 191,075 33,883 5.6:1 199,554 24,737 8.1:1 12,315 2,650 4.6:1 2009 8,592 1,705 5.0:1 7,984 927 8.6:1 12,408 1,927 4,168 705 5,246 1,246 4.2:1 n/a n/a n/a n/a n/a n/a Aberdeenshire 2002 W/L Relet Ratio 195,835 53,187 3.7:1 3,637 1,583 2.3:1 n/a n/a n/a n/a n/a n/a Aberdeen HMA Rural HMA

6.4:1 5.9:1 Source: Lettings returns by local authorities to the Scottish Government, Communities Analytical Services (Housing Statistics).

3.129 Although in 2002 the indicator of pressured areas across Scotland was higher than both Aberdeenshire and Aberdeen City in all areas this has increased over the last 7 years. The measure of a pressured area has been most obvious in Aberdeenshire where the indicator has almost quadrupled over this period. The reason for the change in Aberdeenshire is mainly down to the lack of supply that is available to meet the housing requirements of those applicants on the housing list. In terms of Aberdeen City the supply is an issue but the number on the waiting list has not really increased over the same time period. 3.130 In terms of Housing Market Areas, although historical data is not available, it is clear in 2009 that the pressure is higher in the Aberdeen Housing Market Area and that is mainly due the influence of the Aberdeenshire part of this housing market area.

Bringing the Evidence Together 3.131 The evidence presented in Chapter 2 Demographic and Economic Context and 3 The Current Housing Market provides an insight into the current housing market and past trends in terms of the demographic and economic context, housing stock and housing demand. This section draws

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from the evidence and presents overall conclusions on the current housing market. Changes in Housing Stock 3.132 There are approximately 216,934 dwellings in Aberdeen City and Shire with 110,084 and 106,850 in Aberdeen City and Aberdeenshire respectively. The majority of these dwellings are located within the Aberdeen HMA, which accounts for 72% of the total. Over the past five years there has been a 5.3% increase in properties in Aberdeen City and Shire, with the greatest increase focused on the Aberdeen HMA. Within the Aberdeen HMA there are differences between Aberdeen City and Aberdeenshire. In Aberdeen City there has been a 3.6% increase in housing stock between 2003 and 2008, which is below the Scottish average, compared to 7.2% in Aberdeenshire. Over this period there has also been a significant reduction in vacant properties, especially in Aberdeen City. This data supports local perceptions that housing supply in Aberdeen City has not kept pace with housing demand. 3.133 Analysis of annual housing completions shows that the majority of house building has taken place in Aberdeenshire, and both the number and percentage has been in decline in Aberdeen City over the past 10 years. This highlights the constrained land supply in Aberdeen City, and the focus that there has been on brownfield development. Total housing completions are consistent across the last ten years up to the beginning of 2008 when they declined to approximately half of the last years average as a result of the financial crisis. Signs of an increase in competitions are apparent in the recent quarterly data, but there may be a lag until housing completion levels return to previous rates, especially within Aberdeen City where Start figures remain low. The average annual increase of housing stock in both HMAs has been lower than the average annual increase in households, see Appendix 5.i, which further contributes towards the relative shortage of housing in the area. 3.134 The composition of households living in Aberdeen City and Shire and Scotland were reasonably similar. However, consistent with the age structure of the population, Aberdeen City and Shire had a slightly higher proportion of couple and family households. Aberdeen City has a higher proportion of single adults than Aberdeenshire and, conversely, Aberdeenshire has a higher proportion of family households compared to Aberdeen City. 3.135 Aberdeen City has a high and increasing number of flats accounting for an estimated 54% of stock in 2008, while in Aberdeenshire detached housing makes up 46% of dwellings. . This matches the differences in household composition between authorities. Levels of home ownership are well above average in Aberdeenshire, while with Aberdeen City they are close to the Scottish average. The profile of households in Aberdeen was similar to the profile of households in the other city authorities. Likewise, differences in the composition of households living in Aberdeen and in Aberdeenshire were similar to the pattern found in Scotlands three other city based housing

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Changes in the Social Stock 3.136 There has been a decline of local authority housing stock since 2000, a 17.6% reduction in Aberdeen and 19.6 in Aberdeenshire. This has been almost entirely as a result of tenants taking up a Right to Buy option on their properties. In more recent years the removal of Right to Buy rights due to pressured areas status has helped to slow the loss of local authority housing stock. Additionally the economic downturn and the difficulty in accessing credit has contributed to the reduction in Right to Buy losses. However, the trend is still evident and the past decline still represents a significant proportion of stock. 3.137 There were 8,813 RSL properties in the Aberdeen City and Shire area at the end of March 2008 4,586 in Aberdeen City and 4,227 in Aberdeenshire. RSL stock with Aberdeen City has marginally increased between the 2004/05 and 2008/09, within the highest growth in self contained accommodation. Within Aberdeenshire there has been a marked increase in the RSL stock of 11% with the majority of the increase in self contained units. 3.138 There has been a decline in local authority housing stock in both Aberdeen City and Aberdeenshire over the past 10 years, which is in line with the Scottish average, mainly as a result of Right to Buy. During this period there has been a small increase in the numbers of RSL properties, however there has still been a significant overall decline in social housing in Aberdeen City and Shire. A combination of a decline in stock, increase in population and decrease in affordability of housing has, and will increase the demand for social housing, which is evidenced by declining vacancies and increasing waiting list for social housing. Many vacant properties that were in hard to let areas are now being rented as a result of the increased demand. Affordability and Access to Housing 3.139 Although unemployment rates in Aberdeen City and Shire have been below the Scottish average and incomes well above this has not resulted in increased affordability. There are significant affordability constraints in the owner occupied market and also in the rental market. There has been an increase in the median house price of 146% in the Aberdeen HMA and 142% in the Rural HMA over a 10 year period. This is above the Scottish average and can be attributed towards a constrained market as well as the underlying national trends in the housing market, such as access to credit. 3.140 In 2008 affordability constraints were more severe in the Aberdeen HMA than the Rural HMA. The lower quartile earnings to lower quartile property price ratio is 6.27 in the Aberdeen HMA and 5.78 for the Rural HMA. Rental costs for 2 bed properties are 50% of gross annual, lower quartile, earnings in the Aberdeen HMA and 34.5% in the Rural HMA. Comparing this to affordable income to property price ratio of 3.5 and affordable rental value of 25% of a single earners gross annual income it shows that affordability of private housing is a significant constraint across Aberdeen City and Shire.

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3.141 Over recent years national average house prices have declined. However, latest ASPC data shows increasing house prices in the Aberdeen HMA in the last 3 quarters of 2009. The reduction in house price growth during this period has not resulted in easier access to the owner occupied market, which is due to difficulty in gaining access to finance, and the need for higher levels of deposits. This has meant that those on lower quartile incomes have not benefited from the financial crisis and have been unable to capitalise on the lower prices and will continue to struggle to access market housing. In contrast those with property have seen interest rates fall and their mortgages become cheaper. Issues that policy makers should consider: The following issues have been raised through the evidence presented in Chapter 3 as issues that future policy may need to have consideration of: Constraints to the delivery of new housing in order to meet increasing demand Severe affordability pressures across the study area and in particular within the Aberdeen HMA. The social rented stock in the study area has reduced and there are difficulties in delivering new social rented accommodation to meet needs. The type of stock that is delivered and where it is delivered has an impact on where people choose to live.

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4.

Future Housing Market

4.1 This chapter estimates the likely future population and number of households in Aberdeen, Aberdeenshire, the Aberdeen HMA, and the Rural HMA. It also provides an estimate of the future economic performance of the area. This provides a base to discuss the scale of future housing requirement across Aberdeen City and Shire and future affordability. The research questions that are addressed in this Chapter are: How might the total number of households and household structure change in the future? How are household types changing? How might economic factors influence total future demand? Is affordability likely to worsen or improve?

Population and Household Forecasts Population Methodology 4.2 Our approach makes use of the Aberdeen City and Shire Strategic Forecasts. These forecasts have been used in order to ensure the housing needs estimate is underpinned by the same demographic assumptions that informed the Aberdeen City and Shire Structure Plan approved in 2009. We also anticipate that these forecasts will be reasonably similar to the GRO 2008 based household projections that will be published later this year. 4.3 The Strategic Forecasts migration assumptions were produced in consultation with planning teams, other public bodies and other stakeholders. The Strategic Forecasts were informed by the GROS assumptions, but predicted that the current high rates of net migration out from Aberdeen to Aberdeenshire would be fall back over the forecast period. 4.4 The Strategic Forecasts include a central forecast plus a low and high economic growth scenario. These scenarios build on local intelligence to make a realistic appraisal of the future direction of demographic trends assuming there are no dramatic policy changes and the recent economic events do not change the overall pace or direction of underlying economic growth in the long term. Likewise, the forecasts do not include aspirational or policy targets which may be set within a development plan context. For more information on the methodology for the population and household forecasts please refer to the 2007 Strategic Forecast43.

43

http://www.aberdeencity.gov.uk/Statistics/sl_stt/stt_Home.asp

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Population Forecasts 4.5 The population for Aberdeen City and Shire is forecast to increase from 445,802 in 2006 to 486,369 in 2031, which is an increase of 8.8%. This trend is mirrored in both the HMAs with an 8.8% increase in both the Aberdeen HMA and the Rural HMA. 4.6 Compared to the 2006 based GROS projections for Scotland growth in Aberdeen City and Shire is forecast to be higher than in Scotland as a whole. The Forecasts are a high growth scenario, but the 2006 GROS projections for Aberdeen City and Shire is growth of 6%, which is still above the average for Scotland. 4.7 The 2007 Strategic Forecasts predict the population to grow at a faster rate in Aberdeenshire (10.9%) than in Aberdeen (6.3%). These forecasts are based partly on population trend data and due to the lower levels of population growth in Aberdeen over the past 5 years the population is forecast to continue to increase at a slower rate. Table 4.1 below demonstrates the population forecasts, and Appendix 6.a provides a detailed breakdown of the forecasts. Table 4.1: Population Forecasts
Aberdeen City 206,880 212,000 215,000 217,000 219,000 220,000 Aberdeenshire 236,260 245,000 252,000 256,000 260,000 262,000 Aberdeen HMA 319,061 329,040 336,240 340,560 344,880 347,040 Rural HMA 124,079 127,960 130,760 132,440 134,120 134,960 Aberdeen City and Shire 443,140 457,000 467,000 473,000 479,000 482,000

2006 2011 2016 2021 2026 2031 % Change 2006 3031 6.3% 10.9% 8.8% 8.8% 8.8% Source: Aberdeen City and Shire Strategic Forecasts 2007, High growth forecasts

4.8 The High Growth Scenario from the Strategic Forecasts follows the same upwards trend in the 2006 GROS population projections. GROS project the population of Aberdeen City and Shire to increase by 6% compared to 9% in the Strategic Growth Forecasts High Growth Scenario. One of the main differences is between the predictions for Aberdeen and Aberdeenshire. GROS predict population to fall by 9% in Aberdeen and increase by 19% in Aberdeenshire. The Strategic Forecasts expect that the levels of migration between Aberdeen and Aberdeenshire will not continue at the same rate and population will grow by 6% in Aberdeen and will only grow by 11% in Aberdeenshire. Since the 2006 projections were completed population in Aberdeen has begun to increase, and through discussions with the Strategic Housing Market Partnership it was agreed that the high scenario projections are the most realistic forecasts in light of changes in recent years.

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Population Forecasts by Age Group 4.9 Table 4.2 below identified the population forecasts split by age group for Aberdeen City and Shire, Scotland and the two HMAs. This shows: Changes in the age structure of the population are forecast to be generally in line with Scotland. The only difference being an increase in the 25-29 age group of 3.2% in Aberdeen City and Shire compared to a decrease of -3.6% in Scotland as a whole. The Population is aging at a faster rate than Scotland. There is significant increase in the 65-74 age group (64%), compared to 10.3% in Scotland. There is also significantly faster growth in the 75-84 in Aberdeen City and Shire compared to Scotland. At the HMA level changes are projected to follow the same trend as Aberdeen City and Shire and there is projected to be an increase in the population of the age groups over 50. Within the HMAs there is also forecast to be a very small increase in the 25-29 age group. At local authority level an ageing population has been projected for both Aberdeen and Aberdeenshire. In Aberdeenshire, a larger increase in the 65+ age groups is projected compared to Aberdeen. In Aberdeen there is a projected increase in the 25-29 age group of 3% compared to a decline of 13.4% in Aberdeenshire. There is small growth projected for the 30-49 age groups in Aberdeen compared to small decline in Aberdeenshire.

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Table 4.2: Population Forecasts by Age Group

Age Group % 2006 2031 Change Change Aberdeen City and Shire 0-15 78,957 73,122 -5,835 -7.4% 16-24 51,477 48,241 -3,236 -6.3% 25-29 27,190 28,062 872 3.2% 30-34 27,989 27,841 -148 -0.5% 35-49 103,113 92,182 -10,931 -10.6% 50-64 85,658 88,997 3,339 3.9% 65-74 36,896 60,491 23,595 64.0% 75-84 26,403 47,651 21,248 80.5% 85+ 8,119 19,782 11,663 143.6% Aberdeen HMA 0-15 56,849 52,648 -4,201 -7.4% 16-24 37,063 34,733 -2,330 -6.3% 25-29 19,577 20,205 628 3.2% 30-34 20,152 20,045 -107 -0.5% 35-49 74,241 66,371 -7,870 -10.6% 50-64 61,674 64,078 2,404 3.9% 65-74 26,565 43,554 16,988 64.0% 75-84 19,010 34,308 15,298 80.5% 85+ 5,846 14,243 8,397 143.6% Rural HMA 0-15 22,108 20,474 -1,634 -7.4% 16-24 14,414 13,508 -906 -6.3% 25-29 7,613 7,857 244 3.2% 30-34 7,837 7,795 -42 -0.5% 35-49 28,872 25,811 -3,061 -10.6% 50-64 23,984 24,919 935 3.9% 65-74 10,331 16,937 6,606 64.0% 75-84 7,393 13,343 5,950 80.5% 85+ 2,273 5,539 3,266 143.6% Scotland 0-15 921,833 858,165 -63,668 -6.9% 16-24 602,021 548,573 -53,448 -8.9% 25-29 310,313 299,282 -11,031 -3.6% 30-34 317,183 307,179 -10,004 -3.2% 35-49 1,167,828 1,027,553 -140,275 -12.0% 50-64 959,754 972,106 12,352 1.3% 65+ 5,499,124 6,065,554 566,430 10.3% 75-84 287,021 460,909 173,888 60.6% 85+ 95,203 231,076 135,873 142.7% Source: Structure Plan Figures using Aberdeen City and Shire Strategic Forecasts 2007, Scotland using 2006 GROS Projections

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Household Forecasts Changes in Household44 Formation 4.10 Table 4.3 below demonstrates the change in the number of households in the HMAs. This forecasts the number of households to increase in Aberdeen City and Shire by 25.3%. The key trends are: Increases in the number of households in both HMAs of 25.3%. The number of households in Aberdeenshire are forecast to increase at a faster rate than in Aberdeen, 28.3% increase compared to a 22.2% increase. The overall number of household in Aberdeenshire is expected to overtake the numbers of households in Aberdeen by 2021. 4.11 GROS 2006 based household projections indicate lower growth, but show a similar trend and expect that the number of households will continue to increase over the period 2006 to 2031. Detailed Strategic Forecast and GROS figures are contained in Appendix 6.b. Table 4.3: Household Forecasts
Aberdeenshire 2006 97,624 2011 103,942 2016 110,317 2021 115,693 2026 121,081 2031 125,293 % Change 2006 3031 22.2% 28.3% 25.3% Source: Strategic Forecasts 2007 High Growth Scenario Aberdeen City 98,607 104,664 110,335 114,093 117,452 120,509 Aberdeen HMA 141,286 150,196 158,869 165,446 171,744 176,977 Rural HMA 54,945 58,410 61,783 64,340 66,789 68,825 25.3% Aberdeen City and Shire 196,231 208,606 220,652 229,786 238,533 245,802 25.3%

4.12 Comparing the 2006 GROS Household Forecasts for Aberdeen City and Shire reveal that numbers of households is likely to increase in line with Scotland, a 19% increase is projected for both areas. 4.13 The average household size is projected to continue to decrease in Aberdeen City and Shire, in line with the projection for Scotland as a whole. Aberdeen City is forecast to have a lower household size than Aberdeenshire. Both areas will, however, experience a decrease in average household size over the forecast period. The Strategic Forecasts project the average household size to reduce over the forecast period and is forecast to decline from 2.18 in 2006 to 1.89 in 2031 across Aberdeen City and Shire.

A household is defined as being either: one person living alone, or a group of people (not necessarily related) living at the same address with common housekeeping that is, sharing either a living room or at least one meal a day.

44

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Changes in Age Structure of households 4.14 The forecasts examine the age group of the heads of household over the period; these are shown Table 4.4 below. This shows that across Aberdeen City and Shire and in both HMAs there will be significant increases in the number of households headed by someone in the 60+ age group. Compared to the national trend there are: Larger decreases in the 45-59 age group. Growth in the 16 29 age group is smaller. Larger increase in the number of 60+ households. 4.15 Over the forecast period there will be large increases in the numbers of households headed by 16-29 year olds and a reduction in the number headed by 45-59 year olds. This indicates that: There will be a continuing demand for smaller less expensive properties from first time buyers. There will also be an increased demand for family properties as a result in the increases in the 16-44 age groups. There may be an increased demand for smaller properties from the 60+ age group as a result of potential downsizing. Table 4.4: Age Structure of Heads of Households
2006 2031 Change % Change Aberdeen City and Shire 25,220 27,900 2,680 10.6% 54,270 54,890 620 1.1% 57,490 53,140 -4,350 -7.6% 62,530 101,740 39,210 62.7% 199,510 237,660 38,150 19.1% Aberdeen HMA 16-29 18,158 20,088 1,930 10.6% 30-44 39,074 39,521 446 1.1% 45-59 41,393 38,261 -3,132 -7.6% 60+ 45,022 73,253 28,231 62.7% Total 143,647 171,115 27,468 19.1% Rural HMA 16-29 7,062 7,812 750 10.6% 30-44 15,196 15,369 174 1.1% 45-59 16,097 14,879 -1,218 -7.6% 60+ 17,508 28,487 10,979 62.7% Total 55,863 66,545 10,682 19.1% Scotland 16-29 258,870 298,400 39,530 15.3% 30-44 648,550 668,790 20,240 3.1% 45-59 631,170 626,430 -4,740 -0.8% 60+ 752,820 1,137,480 384,660 51.1% Total 2,291,410 2,731,100 439,690 19.2% Source: Aberdeen City and Shire Strategic Forecasts 2007 High Growth Scenario 16-29 30-44 45-59 60+ Total

4.16 The forecast changes in Aberdeen and Aberdeenshire are very different. In Aberdeen there will be an increasing demand from all age groups for

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housing, whereas in Aberdeenshire there will be a reducing demand from all groups apart from 60+. 4.17 The reducing household size and increasing demand from younger age groups may lead to a potential change in a larger increased in demand for properties in urban areas than in rural areas. Changes in Household Type 4.18 Households are classified in terms of their composition, i.e. the number of adults and children in a household. The relationship between persons in the household has not been distinguished. Table 4.5 shows broad changes in household group in Aberdeen City and Shire compared to Scotland, which shows that area is following national trends and there are significant increases in smaller households, both 1 and 2 person households, and decreases in larger households. GROS data has been used to show a direct comparison. Table 4.5: Projected percentage change of households of each type, between 2006 and 2031
1 Adult Scotland Aberdeen City and Shire Source: GROS 2006 49% 46% 2 Person Households 28% 34% 3+ Person Households -25% -29%

4.19 Figure 4.1 and Figure 4.2 show the forecast change in the broad household types identified for the Aberdeen HMA and the Rural HMA. Detailed figures for the HMAs and local authorities are contained in Appendix 6.c. The key trends identified for the Aberdeen HMA and the Rural HMA are: Overall decreases in the larger household groups in both HMAs. Increasing single person households, 65% in crease in the numbers of single males and 55% increase in the number of single females in both HMAs. 58% increase in the number of households with 1 parent and 1 child in both HMAs

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Figure 4.1: Aberdeen HMA projected percentage change of households type

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006 2011 2016 2021 2026 2031 2 person adult 1 person female 1 person male 2 adult 1+ child 1 adult 2+ child 3+ adults 1 adult 1 child

Source: Aberdeen City and Shire Strategic Forecasts 2007

Figure 4.2: Rural HMA projected percentage change of households type

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006 2011 2016 2021 2026 2031 1 person male 2 person adult 1 person female 3+ adults 1 adult 1 child 2 adult 1+ child 1 adult 2+ child

Source: Aberdeen City and Shire Strategic Forecasts 2007

4.20 The trends for each household type for Aberdeen and Aberdeenshire are moving in the same direction as Aberdeen City and Shire as a whole. The key differences between Aberdeen and Aberdeenshire are: In Aberdeen City 50.7% of all households will be single people by 2013 compared to 40.5% in 2006 In Aberdeenshire 37.3% of all households will be single people in 2013 compared to 27.3% in 2006 Both local authorities are forecast to show a decline in 2 or more adults with children (families) between 2006 and 2031 In Aberdeen City it is forecast that 9.9% of all households will be family type households in 2013 compared to 14.9% in 2006 In Aberdeenshire family type households will represent 13.2% of all household in 2031 compared to 22.8% in 2006.

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Future Economic Performance Impacts of the Financial Crisis on the Scottish and UK and regional economies 4.21 In January 2010, ONS figures confirmed the UK economy has narrowly emerged from 18 months of declining GDP: the longest recession on record. Figures confirming, or otherwise, Scotlands emergence from recession are unlikely to be available until April 2010. The latest Scottish GDP published data reveals that Scottish GDP fell by 0.2 per cent in Q3 2009 and 4.6 per cent over the year to end Sept 2009 (ONS Jan 2010). Since the beginning of the recession the UK economy has declined by 6%. Figure 4.3: Scottish and UK GDP Growth (Quarter-on-Quarter)

4.22 Figure 4.3 above is taken from the Office of the Chief Economic Adviser Dec 2009 report45 and focuses on Q2 2009 data. The UK experienced its first quarter of negative economic growth in Q2 2008 and Scotland followed in Q3 2008,. Since then Scotland and the UK have experienced very similar patterns of negative growth in what has amounted to the longest recession on record. 4.23 Based on the International Labour Organisation (ILO) rate, unemployment remained unchanged over September to November 2009 at 7.8% (ONS Jan 2010) and this has stabilised over 2010 (Figure 4.4). Another very important measure is the employment rate46 which for September to November 2009 was 72.4 per cent at UK level. This is the lowest since winter 1996-97 and is down 0.1 on the quarter (ONS). This is the rate of people who are actually in employment and is seen by many as a truer reflection of the labour market than claimant count or ILO unemployment rates.

45

State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009). 46 Numbers are for those aged 16 and over, % are for those of working age (16-59/64) (ONS)

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Figure 4.4: Scottish and UK ILO Unemployment Rate

4.24 An analysis of the economic performance at regional level is provided by Mackay Consultants monthly economic updates47. Mackay estimate that the first monthly drop in output in Aberdeen City and Shire took place in December 2008 when it dropped 0.5% compared to December 2007. Mackay estimate that output growth since then has remained negative, reaching a low of -3.8% in May 2009 but has since eased to -1.7% in November 2009. Although the effects of the recession took longer to reach Aberdeen City and Shire, since December 2008 the area has suffered the same downward trend as the rest of Scotland and the UK, albeit the extent of the falls in output have been less extreme. 4.25 The claimant count unemployment rates in Aberdeen City and Aberdeenshire have risen to 2.3% and 1.5% respectively, but still remain well below the Scottish and UK averages of 4.1%, see Figure 4.5. Unemployment began to rise in UK and Scotland mid way through 2008, however within Aberdeen City and Shire there was a lag of several months before a rise in autumn 2008.

47

North East Scotland Monthly Economic Report, Mackay Consultants, January 2010.

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Figure 4.5: Claimant Count Rate proportions in Aberdeen City and Aberdeenshire (Jan 2007 to Dec 2009)

Source: Nomis Jan 2010)

4.26 The latest information on employment rates dates from December 2009 when the City had an employment rate of 79.5% compared to a Scottish rate of 74.8% and UK average of 73.3%. Aberdeenshires employment rate was 83.2%. Given that the UK rate has since fallen to 72.4%, as indicated previously, it is likely that the regional and Scottish averages have followed. 4.27 As has been discussed in the Demographic and Economic Context section, the fortunes of Aberdeen City and Shires economy are intrinsically linked to the oil and gas industry. The average monthly price of Brent Crude reached a peak of $147 per barrel in July 2008. The price was above $100 for the six-month period from March to August 2008. 4.28 However, the global nature of the recession, and its effect nationally on construction, manufacturing and services especially, meant that oil and gas would not fully protect Aberdeen City and Shire from the recession. As worldwide demand for oil fell, the monthly oil price reached a four-year low in December 2008 at $40.30. Unemployment subsequently began to rise in Aberdeen City and Shire as redundancies in the oil industry compounded those of other sectors. There has been a gradual increase in the oil price in 2009; up from $43.38 in January 2009 to around $75 in January 2010 but exploration drilling in the UKCS remains at a low level. Overall, while not crowding out the effects of the recession, the recovery of the oil price has had a positive effect in Aberdeen City and Shire and has helped stave off larger scale employment falls in the oil and gas sector than there otherwise would have been. 4.29 However, overall, proportions of unemployment in the UK and locally have not reached the levels which were expected at the onset of th recession. Reasons for this include increased flexibility of the labour market and the worldwide fiscal and monetary stimulus. However, as will be explored later, a

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return to substantial economic and employment growth is not expected for some years nationally or regionally. Impacts of Financial Crisis by Industrial Sector 4.30 This section will highlight the effects by sector nationally; there is no detail available at the regional level. As expected, the decline in economic output is reflected broadly across the UK and Scottish economies. The report of the Chief Economic Adviser (2009) highlights manufacturing fell by 6% between June 2008 and June 2009, other sectors most affected include construction and the banking, finance and insurance and transport and communications. The effects are likely to have been replicated in Aberdeen City and Shire. Aberdeenshire has larger than average manufacturing and construction, as well as food and drink sector. The City has a larger than average finance and business services sectors which is likely to have suffered although not to the same extent as the sector in the Central Belt which is larger still than Aberdeens. Overall the public sector in Aberdeen City and Shire is smaller proportionately than the Scottish average, and so its cushioning effect will have had less impact. However, with large scale public sector cuts expected from at least 2011 Aberdeen City and Shire may suffer comparatively less. 4.31 The oil and gas industry is difficult to assess given its fragmentation across statistical sectors but Oil and Gas UK48 data shows that capital investment was 6% lower in 2008 than in 2007 and this is expected to have fallen again in 2009 given the low oil prices experienced over the year. However, there is scope for recovery in oil and gas activity over the next year given the increasing demand and price for oil. Combined with a weaker sterling, the exporting trade of the Oil and Gas services sector based in Aberdeen City and Shire could be expected to benefit with the effects felt in Aberdeen City and the Aberdeenshire portion of the Aberdeen Housing Market Area especially. 4.32 The manufacturing sector is expected to lead the UK out of recession given the relatively weak strength of Sterling and expected rising global demand. This could have a positive effect in Aberdeenshire especially. The most recent evidence (ONS January 2010) shows a small return to growth in Scottish manufactured exports. This bodes well for the future but its effect will be subdued by a sharp overall decrease in the sector over the last year (down Q2 2008 to Q2 2009 by 8.5%)49 with associated see Figure 4.6. The effect of the recession on growth projections over the short to medium term is explored in the next section.

Oil and Gas UK Activity Survey (2008), as per Fraser of Allander Economic Commentary Nov 2008, Vol 33 No2. 49 State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009)

48

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Figure 4.6: Percentage Change in Employee Jobs in Scotland, June 2008 to June 2009

Source ONS50 [Note: Excludes self Employment]

Economic Growth and Employment Prospects for the Short (term up to 2013) UK and Scotland 4.33 Table 4.6 shows a range of the latest forecasts for UK economic growth up to 2011. After a significant fall in 2009, most economists agree that the UK will return to modest growth in 2010. However, growth is likely to be slow with a number of inhibiting factors including the continued tightening of lending conditions and large scale cuts in public expenditure. The growth forecasts are broadly in agreement, except for the optimistic HM Treasury forecasts for 2011. Table 4.6: UK Economic Forecasts to 2011
International Monetary Fund (Oct 2009) OECD (Nov 2009) Ernst and Young Item Club (Nov 2009) Economist Poll of Forecasts (Jan 2010) HMT Average of UK Independent Forecasts (Nov 2009) HM Treasury Pre-Budget Report (Dec 2009) 2009 -4.4 -4.7 -4.5 -4.7 -4.5 -4.75 2010 0.9 1.2 1.0 1.5 1.2 1.0 to 1.5 2011 2.5 2.2 2.0 Na 2.0 3.25 to 3.75

4.34 In terms of Scottish forecasts, the Fraser of Allander Institute presented a series of possible forecasts, its most optimistic is similar to the Ernst and

Graph presented in State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009) Source: State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009) and Economist Poll of Forecasters, Economist Magazine (Jan 2010).

50

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Young ITEM club forecast but its central forecast (Table 4.7) is more pessimistic. Table 4.7: Forecasts for Scottish Economic Growth
2009 2010 2011 2012 Ernst and Young ITEM club (Nov 2009) Na 0.7% 2.1% Na Fraser of Allander Institute Central Forecast (Nov 2009) -5.0% 0.1% 1.1% 1.6% Source: The Fraser of Allander Institute Economic Commentary Dec 2009 http://www.strath.ac.uk/media/departments/economics/fairse/Latest-Fraser-of-AllanderEconomic-Commentary.pdf

4.35 The latest unemployment forecast for Scotland as outlined in the Chief Economic Advisers State of the Economy Presentation51, highlights the possibility of what could seem like a jobless recovery (Table 4.8). Essentially this is due to the slack in production capacity which has been created in the economy over the course of the recession taking time to feed through to rehiring levels. Table 4.8: Unemployment Forecasts for Scotland
2009 2010 2011 2012 CC 4.7 4.9 4.6 4.0 ILO 7.6 9.2 8.7 7.7 CC 4.9 5.8 5.2 4.2 Experian ILO 7.0 8.5 8.5 7.5 CC = Claimant Count Rate, ILO = International Labour Organisation defined unemployment rate Source: State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009) ITEM club Nov 2009 Fraser of Allander Inst (Nov 2009)

Aberdeen City and Aberdeenshire Regional Growth Projections 4.36 There are two sources which provide estimates of short to medium term economic growth projections for the region: Mackay Consultants (2009)52 and Oxford Economics (2008)53. These two sources offer contrasting views on the regions growth prospects which are outlined in Table 4.9 and Table 4.10. Table 4.9: Aberdeenshire Growth Forecast
2008 2009 2010 2011 2012 Oxford Economics/Slims(late 2008) +1.9 -2.5 +0.9 +2.5 +3.1 Mackay (2009) +1.3 -3.2 +0.5 +1.3 +1.8 Source: North East Scotland Monthly Economic Report, Mackay Consultants, Feb 2009 and Aberdeen City and Shire Economic Review, Slims/Oxford Economics, (2008)

Table 4.10: Aberdeen City Growth Forecast

2008 2009 2010 2011 2012 Oxford Economics/Slims (late 2008) +1.2 -2.8 +0.1 +1.6 +2.1 Mackay +1.5 -2.7 +0.9 +1.4 +1.8 Source: North East Scotland Monthly Economic Report, Mackay Consultants, Feb 2009 and Aberdeen City and Shire Economic Review, Slims/Oxford Economics, (2008)
51

State of the Economy Presentation December 2009, Office of the Chief Economic Adviser, Scottish Government (2009) 52 North East Scotland Monthly Economic Report, Mackay Consultants, Feb 2009. 53 Aberdeen City and Shire Economic Review, Slims/Oxford Economics, (2008)

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4.37 Oxford Economics based these predictions on information which was available at the time of their study late 2008. They had predicted that the UK economy would only decline in 2009 by 2.9% (around 4.5% was the actual figure). It has now turned out that the recession was worse than had been envisaged at the time, but the forecasts are understandably cautious for Aberdeen City at least. It is not represented on the above table, but Oxford Economics had predicted that the region would suffer a slightly greater fall in GVA than Scotland as a whole. The report points out that GVA does not include offshore54 oil and gas activity, so the there could be a cushioning effect which is not shown. The Oxford and Mackays projections for 2008 and 2011 and 2012 forecasts which differed markedly with Oxford predicting a strong performance in Aberdeenshire compared to the City. However, if Mackays less optimistic prediction is accepted, growth for Aberdeenshire may be more likely to mirror the expected levels of the City in the short to medium term. The likely implications of short and medium term growth rates for the housing market 4.38 There has been a retrenchment in house sales activity and slowdown in social rented sector. Earlier chapters have shown that house sales activity has fallen to levels far below averages experienced over the last 5 years. This stagnation of the house market has been brought about by a lack of mortgage availability, and compounded by the recession which had started as a credit crunch. It is worth noting that mortgage lending has not significantly improved since the onset of the credit crunch, but transactions have picked up steadily since their low point in January 2009. Whilst house price growth detailed previously in the report could be deemed unnaturally high due to the relaxation of lending conditions, house sale transactions are now unnaturally low which has a negative effect on the economy leading to a inelasticity of the labour supply and prices which remaining high due to lack of activity rather than as a function of supply and demand. 4.39 Figures on completions presented in an earlier section show that in Aberdeenshire numbers initially held up well to the effects of the credit crunch. In Aberdeen City, housing starts show signs of an improvement and are above Scottish averages. In terms of future demand, there are signals from that within Aberdeen City there is likely to be less brownfield development at least in the short term. Reasons for this are the higher costs associated with development such as remediation of land, disproportionately tight financing restrictions on such developments given their greater up-front investment requirement, and thus risk, than greenfield development, as well as lower consumer demand as a result of the slow down of the urban buy to let market.

54

Emphasis added

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4.40 While the credit crunch had a sudden nationwide impact on mortgage lending, in Aberdeenshire the greenfield type of development and the likely strong financial position of buyers of such development in a region which was hit later by the recession possibly explain the lack of a slowdown. It is clear however that the area is now affected with starts now closer to the Scottish average. 4.41 Overall in terms of future supply, Aberdeen City and Shire is being less badly affected than most Scottish regions. The economic growth rate projections are pessimistic and only forecast a slow recovery. This means that market activity is highly unlikely to return to 2007 levels in the short to medium term. However, there is still a demand for new housing in the short term which is likely only to be partially met due to restrictive mortgage lending practices. When this disequilibrium is combined with the effect of slow to steady growth (cushioned by a recovering oil and gas industry), local house prices are likely to remain at least at their present levels and could be expected to enter a period of stability but at historically high price levels. Economic Growth and Employment Prospects for Medium Term (up to 2019). 4.42 Oxford Economics provide forecasts for the medium to long term GVA growth and employment growth. They forecast a slightly better than average GVA growth performance of Aberdeen City and Shires economy compared to the UK in the short term, due to its lower dependence on high value manufacturing, financial sector and its larger than average university and research sector. However, the report cites Aberdeen City and Shires smaller than average service sector as an inhibitor to GVA growth which will lead to Aberdeen City and Shires recovery trailing that of Scotland and the UK in the medium term (up to 2019) (Figure 4.7). Figure 4.7: GVA growth 1981 to 2019

Source: Oxford Economics (2008)

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4.43 The Oxford Economics forecasts do not see Aberdeen City and Shire regaining all the jobs lost in the current recession in the next decade (Figure 4.8) . They show large scale declines in the following industries: Extraction (oil and gas related) will lose 2922 jobs in Aberdeen City, or 13.5% of the workforce and 322 jobs in Aberdeenshire or 11.1% of the workforce. The other large fall is in manufacturing which is expected to shed 3936 jobs in the City, or 29.8% of the workforce and 3247 jobs in Aberdeenshire, which is 24% of the workforce. The only sectors forecast to add growth are the education, health and finance sectors, but this does not offset the loss of the extraction and manufacturing sectors. The growth of the education, health and financial sectors cannot be taken for granted when large scale public sector cuts are considered, but it is presumed that a large proportion of this expected growth derives from the University and Research sector, much of which would be based in the Aberdeen HMA. Figure 4.8: Employment Growth 1981 to 2019

Source: Oxford Economics (2008)

4.44 The North Sea oil industry has been the biggest contributor to economic growth in Aberdeen City and Shire over the last 40 years, but is naturally entering the second half of its life. The Oxford Economics report cites a Oil and Gas UK report (2008) which forecasts oil production falling 44% between 2007 and 2018 in the UK Continental Shelf. It should be noted that Oxford Economics still predict that the Economic Activity rates, despite falling, will remain well above the UK and Scottish averages. 4.45 However, much local employment is now linked to personnel working overseas through the export of goods and services. This sector is expected to undergo steady growth as the Aberdeen HMA becomes a base for a specialised sector of the energy industry which is not directly impacted by declining production in the UKCS. Overall, though, what the Oxford report highlights are the long term implications of the recession affecting the

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manufacturing sector and compounding a declining regionally important oil industry. 4.46 The Building on Energy: The Economic Manifesto for Aberdeen City and Shire by the Aberdeen City and Shire Economic Future (2007)55 is an agenda for growth which sets out an action plan for the growth and diversification of Aberdeen City and Shires economy up to 2025. It highlights that the region is starting from a point where it has the 15th highest GDP per head of all European regions (2007) and sets out a vision for 2.5% GVA growth for the Action Plan period. It sets out key objectives to maintain the energy industry at 40,000 employees, double the number of Life Science companies from 18 in 2006 to 36 in 2012 and continue to grow the sector, Tourism and the Food and Drink sectors are also targeted as growth industries. 4.47 The Economic Manifesto also identifies the opportunities in the area to draw on the skilled labour force to establish Aberdeen City and Shire as a global centre of excellence for all-energy development. Future Affordability 4.48 Currently housing is unaffordable to those on lower earnings, as discussed in the section on affordability. There are considerable affordability constraints to those households with a single income, and across both HMAs lower quartile properties are unaffordable to those people on median incomes. 4.49 In 2007 a review of the Scottish housing market (Scottish Government, 2007), which was completed prior to the financial crisis, expected that in the medium-term affordability constraints are likely to restrain house price growth to the growth in earnings. The financial crisis has led to a halt on growth in the economy and a global recession, and as a result decline in house prices nationally, while locally falls have been more modest, and in many cases prices have continued to increase. Opinion from the SHMP and local experts points to an improvement in the performance of the housing market and a general upward trend in prices. 4.50 An increasing population and household numbers combined with; both a pent up demand from first time buyers and there is a legacy of a lack of housing supply mean that the fundamentals of housing demand in Aberdeen City and Shire are strong. However, the ability to translate that aspiration into achievable demand is weak as lending remains tight. 4.51 Housing affordability for those existing homeowners in secure employment and has improved over the last two years in most areas of the UK and locally56as a result of lower house prices and reduced mortgage rates. Mortgage payments as a proportion of earnings are now below a 25 year average. However, constrained credit has meant that first time buyers have
55

56

http://www.acsef.co.uk/infoPage.cfm?pageID=2

http://www.lloydsbankinggroup.com/media/pdfs/halifax/2010/FirstTimeBuyersAnnualReviewD ec2009.pdf

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still been priced out of the market despite affordability improving in most regions in the UK since the onset of the downturn. Typical UK first-time buyer deposits rose from under 15,000 in the second quarter of 2007 to 19,000 in 2008 according to the Council of Mortgage Lenders 57 before peaking at 25% in February 200958 and have remained around this level since. The 100% mortgage availability which marked the peak years of the housing boom has disappeared and is generally regarded as unlikely to return. Evidence suggests that access to deposits for first time buyers in the most buoyant areas relies strongly on parental assistance. The typical first-time buyer income multiple has remained at 2.97 since April 2009. Typical, non first time buyers, borrowed 67% of the value of the property in May 2009, and borrowed 2.68 times their income. 4.52 Aside from credit supply conditions, unemployment is likely to remain at relatively high levels in the short to medium term across the UK and Aberdeen City and Shire, as discussed within the Future Economic Performance section. What this means for the housing market is uncertain but earnings growth is likely to be suppressed. In Scotland, a report by Capital Economics59 suggested that unfavourable demographics and an overdependence on the public sector and the oil and gas sector will suppress house price growth over the coming decade. The report explains: As Scotland is one of the regions most dependent on the public sector for jobs, the looming public sector squeeze will have a significant impact on its housing market. The Capital Economics report suggests that as Scottish house prices typically rise by 0.3 per cent less than the UK each year, a predicted UK growth of 2.5 per cent a year over the next decade (with the correction ending in late 2012-early 2013) points to an annual Scottish house price rise of 2.2 per cent. 4.53 The decline of the oil and gas sector is of particular relevance to Aberdeen City and Shire, but as indicated above there is less dependence of the public sector and more favourable demographics than in most parts of Scotland. Still, the generally weak predictions for growth in Aberdeen City and Shire as outlined previously are likely to have a strong influence on house price growth in the short and medium term with house prices likely to remain stable, although still high by historical standards. 4.54 In the medium term, housing supply will continue to depend on the ability of banks to lend and the ability of the construction sector to respond to recovering demand. The construction sector can only be expected to respond to recovering demand if the financial sector provides increased lending to fund construction projects and provide individuals with mortgages. The consequences of continued restrictions in financing in the medium term could be a decline in the construction sectors capacity and a dysfunctional housing market where the ability to purchase housing remain impaired and prices remain unaffordable. .
57 58

http://www.cml.org.uk/cml/publications/newsandviews/27/83 http://www.cml.org.uk/cml/media/press/2329 59 http://thescotsman.scotsman.com/business/Scottish-house-prices-predicted-to.5987758.jp

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4.55 The Structure plan sets long-term housing aspirations for the area, and this has provided large housing allowances for both local authorities. Once allocated through the local development plans these allocations will help facilitate an increase in house building, especially in Aberdeen where land has been in short supply. This should help to keep house price growth closer aligned to growth in incomes in the longer term and allow for a more elastic supply. Future Population and Households Bringing the Evidence together 4.56 This section uses the evidence presented in this chapter to identify high level messages about the key trends and drivers to which future policies will need to respond to. What are the key issues for future policy/strategy?

4.57 Forecasts expect the population of both HMAs and local authorities to increase year on year to 2031. An overall increase in population of 9% is forecast for Aberdeen City and Shire. 4.58 The age profile of Aberdeen and Aberdeenshire is projected to change over the forecast period. The GROS projects a reduction in the 0 - 15 age group and an increase in the pensionable and 75+ age groups. This would, if the projections became reality, have a significant impact on the local economy. There is a forecast increase in the number of 1 adult households and a decrease in the number of 2 adult 2 children households. 4.59 The number of households is projected to increase in both HMAs and local authorities due to an increasing population and a reduction in average household sizes. Projections are based on past trends and there is a need to take caution when using projections to plan for future need and other consideration must be taken when setting housing land supply targets. 4.60 Table 4.11 below sets out the range of household forecasts using the Strategic Forecasts and provides an average annual housing requirement based on the newly forming households. This would solely meet the requirements of the forecast change in households. Table 4.11: Average Annual Housing Requirements 2006 - 2031
Low Probable High Aberdeen 738 928 1,155 Aberdeenshire 585 957 1,208 Aberdeen HMA 1,036 1,457 1,817 Rural HMA 287 427 547 Aberdeen City and 1,322 1,884 2,364 Shire Source: Aberdeen City and Shire Strategic Forecasts 2007

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4.61 The housing requirements are not constant up to 2031 and Table 4.12 below shows the housing requirements broken into 5 yearly requirements. Table 4.12: Housing Requirement High Growth Scenario
2006/11 Aberdeen HMA Rural HMA Aberdeen City and Shire 10,615 3,405 14,020 2011/16 10,863 3,288 14,150 2016/21 8,568 2,523 11,090 2021/26 8,268 2,423 10,690 2026/31 7,105 2,035 9,140 Total 45,418 13,673 59,090

Source: Aberdeen City and Shire Strategic Forecasts 2007

4.62 During the current economic climate economic forecasting is more volatile than ever, and little certainty can be attributed to any single forecast. However, having analysed a number of forecasts for the UK, Scotland and Aberdeen City and Shire it would indicate that the economy is expected to grow in 2010, albeit at a low rate and growth would rise to between in +1.8% and +3.1% in 2012. In the longer term economic growth is forecast to continue, but at a slower rate than in the UK and Scotland as a whole. 4.63 The Oxford Economics report highlights the challenges facing Aberdeen City and Shire and how these have been compounded by the recession. The ACSEF vision sets out a strategy to deal with the challenges and opportunities facing the areas economy in the long run. 4.64 However, it is the Experian Aberdeen City Region Economic Review (2007)60 which although written pre-recession highlights the critical issues which are likely to affect Aberdeen City and Shire in the long term and suggests some essential policy responses to address them. The need for diversification of current high value sectors into alternative high value sectors and markets is highlighted. Yet one of the key factors which is a result of Aberdeen City and Shires legacy of the oil and gas industry is the high employment rate, it has stabilised at around 80%, which is the Governments classification of full employment. The preceding chapters have shown the positive effects of a high value economy: full employment, house price growth, increasing prosperity. However, in the medium to long term many of these factors are potential inhibitors to further growth, accordingly the low rate of population growth and potential labour and skills constraints are identified as restrictions which can be eased through policy and strategy.

4.65 While the recession is likely to lead to a short to medium term overall reduction in the employment rate, the continued attraction of a young, skilled population is essential to maintain high value economic growth in Aberdeen City and Shire. When Aberdeen City and Shire is compared to high prosperity European competitors in the Experian report, it was shown to have the lowest
60

Aberdeen City Region Economic Review, Experian (2007)

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population growth of all those studied. Moreover, the regions with the fastest population growth experienced the fastest GVA growth. The issue of a highly inelastic labour supply, increasingly unaffordable house prices and an ageing population are ones which dramatically affect a Regions competitiveness. In order to support economic growth a plentiful supply of development land, including housing land, is essential. 4.66 Completions in Aberdeenshire have remained relatively high during the financial crisis, but in Aberdeen completions have fallen drastically. As a result of private developers scaling back with the onset of the recession it could take time for completions to return to average rates for the period 1997-2006, which could lead to house prices inflating faster than incomes. 4.67 House prices are currently well above affordable levels, and there would need to be significant price reductions or increase in earnings for housing to become affordable to those within the lowest quartile for earnings. Delivering significant amounts of new houses in line with the structure plan housing targets will increase overall supply by 29%. However, there is a forecast requirement for a 25% increase in overall stock to meet reducing average household size and increasing population, and there is an ambition from both Councils to grow the population beyond the forecast levels. Therefore, there is little to suggest that housing will become more affordable due to the increased supply. 4.68 House prices increasing at a faster rate than incomes, as has been the case in recent years up to the financial crisis, benefits those that currently own their own home. However, for those people who do not own their own home it simply decreases their chances of being able to afford housing. There is currently a wide wealth gap across Aberdeen City and Shire, and should house prices increase at a faster rate compared to incomes this would continue to widen the disparities of wealth in the area.

5. Housing Requirements of Specific Household Groups

Introduction 5.1 This chapter examines the housing requirements of specific household groups in accordance with Scottish Government guidance. The research questions that are addressed in this chapter are: To establish the extent and nature of housing need particular to specific household groups

5.2 Scottish Government (2008) guidance emphasises the requirement to consider the needs of certain population sub-groups and how their needs might differ from those of the general population. The sub-groups of the

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population considered in this chapter include the following vulnerable households with particular housing needs. Older people; People with physical disabilities; People with learning difficulties; and People with mental health or substance misuse. 5.3 This chapter also considers the distinctive housing requirements of: Families and lone parents; Ethnic minority households; EU migrant workers; Gypsy Travellers and show people; Students; Homeless Households including young vulnerable adults, especially those under 17 years leaving care and those households fleeing domestic violence or abuse; and Lesbian, Gay, Bisexual and Transgender households. 5.4 This chapter draws on the findings from several independent studies that are referenced as footnotes throughout the chapter. It also makes use of prevalence61 rates. The rates for older persons, people with physical disabilities and/or learning disabilities are those detailed in Communities Scotland Local Housing Systems Analysis: Good Practice Guidelines (OSullivan et al, 2004) whilst the Alzheimers Scotland prevalence rate was applied in respect of people with dementia. 5.5 Prevalence rates only provide a generalised approximation of need. The Strategic Housing Market Partnership has also highlighted that such rates are not particularly robust for areas with small and/or more dispersed populations. An important aspect of developing the HNDA in the longer-term will be to improve locally gathered evidence to permit finer grained analysis, especially in the more rural areas of Aberdeenshire. Older People 5.6 As chapter 2 reported, the proportion of the population aged 50 years or above is currently comparable to the rate for Scotland as a whole (). Moreover, as discussed in chapter 4, projections suggest that the Aberdeen City and Shire population aged 50+ years will increase from 157,076 in 2006 to 204,459 by 2021 and 216,921 by 2031. Thus by 2031 45% of the population could be aged 50+ years. Table 5.1: Numbers older people, 2006-2031 and prevalence of dementia
Age Group 50-64 65-74 75-84
61

2006

2021

2031 37,221 23,442 20,817

Number Change 878 6,506 6,628

% Change 2.42% 38.41% 46.71%

Aberdeen City 36,343 41,136 16,936 21,441 14,189 16,120

The percentage of people with a specific requirement/need in the population as a whole

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85+ Dementia Prevalence Projected* (in 85+)

3,821 6,037 7,320 3,499 91.57% 902 1425 1728 826 91.57% Aberdeenshire 50-64 49,315 59,772 51,776 4.99% 2,461 65+ 19,960 33,065 37,050 85.62% 17,090 75-84 12,214 18,909 26,833 119.69% 14,619 85+ 4,298 7,980 12,462 189.94% 8,164 Dementia Prevalence Projected* (in 85+) 1,014 1,883 2,941 1,927 189.94% Aberdeen HMA 50-64 61,674 72,653 64,078 2,404 3.90% 65-74 26,565 39,244 43,554 16,988 63.95% 75-84 19,010 25,221 34,308 15,298 80.47% 85+ 5,846 10,092 14,243 8,397 143.65% Dementia Prevalence Projected* (in 85+) 1,380 2,382 3,361 1,982 143.65% Rural HMA 50-64 23,984 28,254 24,919 935 3.90% 65-74 10,331 15,262 16,938 6,607 63.95% 75-84 7,393 9,808 13,342 5,949 80.47% 85+ 2,273 3,925 5,539 3,266 143.65% Dementia Prevalence Projected* (in 85+) 537 926 1,307 771 143.65% Aberdeen City and Shire 50-64 85,658 100,908 88,997 3,339 3.9% 65-74 36,896 54,506 60,491 23,595 64.0% 75-84 26,403 35,029 47,651 21,248 80.5% 85+ 8,119 14,016 19,782 11,663 143.6% Dementia Prevalence Projected* (in 85+) 1,916 3,308 4,666 2,752 143.6% Scotland 50-64 959,754 1,118,065 972,106 12,352 1.3% 65-74 455,744 482,164 501,318 45,574 10.3% 75-84 287,021 366,659 460,909 173,888 60.6% 85+ 95,203 159,562 231,076 135,873 142.7% Dementia Prevalence Projected* (in 85+) 22,468 37,657 54,534 32,066 142.7% Source: Strategic Forecasts High Growth Scenario & *23.6% of 85+prevalence rate from Alzheimers Disease International Factsheet 3 (April 1999)

5.7 The rational for age groups 50 plus to be considered within the HNDA stems from national policy decisions. For example All our futures: Planning for a Scotland with an Ageing Population states that for the purpose of the strategy there was to be a focus mainly on, although not exclusively, on the over 50 age group62. 5.8 also indicates that: The rates of increase in the numbers of older people in each of the 4 age cohorts are similar across both housing market areas. Aberdeenshire is forecast to have a much greater numeric and proportionate increase in the numbers of older people aged 65+ than Aberdeen City. This is based on the assumption that the resident population currently aged 45-64 years will remain in Aberdeenshire in to retirement.

62

All Our Futures: Planning for a Scotland with an ageing population, Scottish Executive, 2007

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GROS 2008 based population projections published in early 2010 and the 2006-based Local Strategic Forecasts indicate much of the rise in older people will occur from 2021 onwards. The steep rise in the population aged 85+ years across Aberdeen City and Shire, may lead to a corresponding rise in the numbers of people with some degree of dementia, especially after 2021.

5.9 Appendix 7 provides an overview of the older population age group (65+) and the potential growth in terms of housing services, care and support. Medium needs give an indication of the potential demand for housing services such as community alarm and adaptations, whilst high needs shows the potential growth of those who may require more intensive housing support and have particular housing needs. Clearly there will be a requirement to work closely with clients, social work services and the NHS to plan for and appraise the available range of options, including for example extra care housing or intensive home career packages. Older person living arrangements 5.10 Shifting the Balance of Care (SBC63), which aims to assist older households and other vulnerable people to live in their own home or a community setting is a central objective of health and community care policy. 5.11 Within Scotland in 2001, 90% of older people live within their own homes, 5% within Care Homes and 5% within Sheltered and Very Sheltered Housing64. This is broadly similar to the profiles in Aberdeen City and Aberdeenshire as shown in Figure 5.1.

Figure 5.1: Living Arrangements of Older People in Aberdeen City & Shire 2001

63

Shifting Balance of Care requires a partnership approach from the NHS, Local Authorities and the third sector (www.shiftingthebalance.scot.nhs.uk) 64 Housing for an Ageing Population, DoH, 2007

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100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Care Home
Source: Census 2001

ACC A/Shire

Specialist

Ordinary Housing

5.12 Of the older households living in the community, as Figure 5.2 shows, around 7 out of 10 were owner-occupiers and most others were living in general or specialist social rented housing.

67

Health Series: Care Homes, Scotland, 2008

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Figure 5.2: Household Tenure of Working Age Population (16-59) and Older People in Aberdeen City and Shire

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Working age population ACC Working Age Population A/shire Older population ACC Older Population A/Shire Owned 64% 79% 76% 67% Social Rented 22% 17% 20% 25% Private rented/rent free 14% 5% 4% 8%

Source: Census, 2001

5.13 Scottish Government figures67 indicate that in line with the Shifting the Balance of Care agenda, there has been some fall in the numbers of care home places since 2001. Nonetheless, as Table 5.2 shows, both Aberdeen City and Aberdeenshire continue to have a higher proportion of care home places per 1,000 older people relative to Scotland as a whole (Table 5.2). Table 5.2: Number of Care Home places per 1000 population aged 65+, March 2008
Number of care places March 2000 Number of care places March 2008 Change March 20002008 -17.5% -4.4% Number care home places per 1000 people aged 65+ March 2008 48.5 51.6 49.2 44.7

Aberdeen City 1,896 1,565 Aberdeenshire 2,017 1,929 Aberdeen City and 3,913 3,494 -10.7% Shire Scotland 39,204 37,829 -3.5% Source: Statistical Bulletin: Health Series: Care Homes, Scotland, 2008

5.14 The continuing policy driven shift away from care home provision will no doubt increase the numbers of older households living in their own home and may increase demand for dwellings that are or can be easily adapted to suit the varying needs of this client group. Page 116

Sheltered and Extra Care Housing

5.15 Table 5.3 summarises the numbers of specialist housing units in the social rented sector. Whereas 72% of the 330 very sheltered units are owned by housing associations, 77% of sheltered housing is owned by the two local authorities. Table 5.3: Social Rented Housing Units for Older People, March 2009
Housing for older people Very Sheltered Per 1,000 of older pop Sheltered Per 1,000 of older pop of which LA wheelchair adapted Per 1,000 of older pop Medium dependency Per 1,000 of older pop LA Dwellings with community alarm Per 1,000 of older pop Aberdeen City 178 2.5 2,672 37.5 179* 2.5 554 7.8 2,032 28.5 Aberdeenshire 152 1.6 2,142 23.2 1,192 12.9 972 10.5 2,074 22 Scotland 5,346 6.7 32,691 38.8 1,934 2.3 14,419 17 33,017 39

Source; Scottish Government, housing for older people and those with disabilities web tables, 2009 Notes: The numbers should be treated with some caution because for some there may be differences in the recording and reporting mechanisms used by each local authority area. Wheelchair and community alarm numbers relate to local authority dwellings only. Medium dependency housing is sometimes known as amenity housing. Dwellings are adapted to suit particular needs of tenants, so numbers in these categories may rise or fall from year to year.

5.16 In addition to this social rented provision, there are 510 private sector retirement homes provide in Aberdeen City and Shire, Aberdeen City has 8 developments providing 322 flats and Aberdeenshire has 3 developments providing 188 flats. 5.17 Both Aberdeen City and Aberdeenshire councils are reviewing the future demand for and sustainability of their sheltered and very sheltered housing stock. This could result in some changes in the provision of sheltered housing in the coming years, such as the conversion of some existing units into extra care housing, mainstream housing and the conversion of bedsit provision into larger 1 and 2 bedroom units. Housing related circumstances and needs of older people 5.18 Figure 5.3 shows that the numbers of people applying for sheltered and very sheltered housing, has averaged around 1,000 for Aberdeen City and 790 for Aberdeenshire between 2007 and 2009 inclusive, although numbers

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have fluctuated from year to year in Aberdeenshire. This is in marked contrast to the continued increase of the housing waiting list in Aberdeenshire from 2005 to 2009, as can be seen on Table 3.42. Figure 5.3: Waiting List Applicants seeking sheltered housing, 2007 -2009
1200 1000 800 600 400 200 0 2007 2008 2009
Aberdeen City Aberdeenshire

Source: Aberdeen City Council, Housing & Environment Service Source: Aberdeenshire Council, Housing & Social Work Service

5.19 Some caution needs to be exercised with regards to the use of waiting lists as a measure of demand. Some people apply for sheltered housing as an insurance against future need. Conversely some older people only seek sheltered housing or some other form of specialist provision at a crisis point.68 Nonetheless, the absence of any significant growth in the numbers of applications for specialist housing in recent years (especially when set against the growth in the numbers of older households) is important. This supports the general perception that the growth in older households over the next two decades will result in considerably higher numbers of older households living in the private sector, primarily in the owner occupied sector. In common with the rest of the UK, Aberdeen City and Shire is therefore likely to see continuing growth in demand for: Aids and adaptations to assist older households live more comfortably in and/or remain in their own home cross all tenures. In the last 5 years there has been increasing demand for Care and Repair69 services, including the small repairs service. Growing numbers have also applied for grant assistance to undertake more substantial repairs and adaptations; and Housing support and other care services, particularly from the growing numbers of older single person households that are likely to survive into their 80s or 90s but may have mobility problems or other infirmities, including some degree of dementia.

68 69

Review of Sheltered Housing in Scotland, Scottish Government, 2008

Care and Repair offers free advice and assistance with repairs, improvements and adaptations to resident owner-occupiers and private tenants. The services in both Aberdeen City and Aberdeenshire are for the age of 60 and/or have a disability.

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5.20 There is also much speculation that growing numbers and proportions of owner-occupiers will look to move house in their 50s to 70s in order to find more manageable homes and/or free up equity70. However the potential housing related demands associated with this assumed emerging trend require improved understanding nationally and locally. Physical Disability 5.21 The Disability Discrimination Act 1995 (DDA) defines disability as: a physical or mental impairment which has a substantial and long-term adverse effect on a persons ability to carry out normal day-to-day activities. For the purposes of this study, the following paragraphs consider the needs of people with a physical or sensory disability and/or those with an acquired brain injury, which may result in physical or cognitive difficulties. 5.22 The 2001 Census estimated the number of people with a physical disability residing in Aberdeen City was 37,173, and 34,000 in Aberdeenshire. 5.23 Applying the prevalence rates from the Local Housing System Analysis Good Practice Guide to the future population projections suggests that there will be an across the board fall in the number of persons within the 16-64 age range with a disability (Table 5.4). This is largely because the numbers of people in this age band are expecting to decline, especially after 2021. However, the anticipated fall in the numbers of working age people with a disability in Aberdeen City and Shire is projected to be much lower than for Scotland as a whole, as shown in Table 5.4.

Housing Choices and aspirations of older people, Karen Croucher Centre for Housing Policy, University of York February 2008, Communities and Local Government: London

70

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Table 5.4: Prevalence estimates of people aged 16-59 years with physical disabilities, 2006-2031
Age Group (16-64) Population with a disability low need medium needs high needs Population with a disability low need medium needs high needs Population with a disability low need medium needs high needs Population with a disability low need medium needs high needs Population with a disability low need medium needs high needs 2006 2021 Aberdeen City 7,399 4,367 2,220 812 Aberdeenshire 7,839 4,627 2,352 861 Aberdeen HMA 10,972 6,475 3,292 1,205 Rural HMA 4,219 4,267 4,074 2,490 2,518 2,405 1,266 1,280 1,222 463 469 447 Aberdeen City and Shire 15,067 8,892 4,520 1,654 15,238 8,994 4,572 1,673 Scotland 14,552 8,588 4,365 1,598 -144 -85 -43 -16 -3.42% -3.42% -3.42% -3.42% 2031 Change % Change

7,239 4,272 2,172 795

7,172 4,233 2,152 787

-67 -40 -20 -7

-0.9% -0.9% -0.9% -0.9%

7,828 4,620 2,348 860

7,380 4,356 2,214 810

-448 -264 -134 -49

-8.55% -8.55% -8.55% -8.55%

10,848 6,402 3,254 1,191

10,477 6,184 3,143 1,150

-371 -219 -111 -41

-3.42% -3.42% -3.42% -3.42%

-515 -304 -155 -57

-3.42% -3.42% -3.42% -3.42%

Population with a 171,212 168,767 160,889 -10,323 -6.03% disability 99,605 low need 104,070 97,795 -6,275 -6.03% 50,630 medium needs 51,364 48,267 -3,097 -6.03% 18,531 high needs 18,800 17,666 -1,133 -6.03% Source: Strategic Forecasts High Growth Scenario and Scottish Government 1997 prevalence based guidelines Notes: Low need low level support possible minor adaptations Medium Needs possibly moderate adaptations/ramps and/or possibly domiciliary support High Need likely to require high support and possibly specialist housing barrier free and wheelchair

Living arrangements and tenure 5.24 Over a quarter of households of all ages in Aberdeen City and Shire contain someone with a long-standing illness health problem or disability (27% in Aberdeen City and 26% in Aberdeen shire).However, there is considerable overlap between this group and older households. Page 120

5.25 As Table 5.5 shows almost a third of such households are outright owners. Although firm evidence is not available, we assume most of this subgroup are older households. A further 45% live in the social rented sector, suggesting a reliance on this sector in terms of addressing their housing need, particularly amongst those below 60 years. Table 5.5: Housing Tenure for households that had a long standing illness, health problem or disability
Housing tenure Owned Buying with help of Social Other outright loan/mortgage rented Aberdeen City 31.9% 13.9% 45.8% 8.4% Aberdeenshire 33.3% 13.6% 39.7% 13.4% Source: Scottish Household Condition Survey 2003/04 Note: other should be treated with caution due to small sample numbers. A percentage of those in all tenures may not necessarily have a physical disability/ mobility related problem but rather a long standing illness or health problem Local Authority Area

5.26 The high levels of working age households that contain someone with a disability and rent from a social landlord is broadly consistent with the Scottish level; disabled persons and their families are twice as likely to live in the social rented sector as non-disabled households. This possibly reflects the fact that disabled people and their families typically have lower than average incomes and above average living costs71. 5.27 Table 5.6 shows the number of properties suitable for those with a physical disability provide by the social rented sector. Aberdeenshire has a significant proportion of other suitable properties, as is shown in the table below; 1,172 properties in total against a total within Scotland of 9,262, whereas Aberdeen City only has 13. More analysis will be required as this could be down to the local authorities recording mechanisms that are in place. Table 5.6: Housing provision specifically for those with disabilities by public authorities and housing associations as at March 2009
Housing for people with a physical disability adapted for wheelchair ambulant disabled use other adapted Aberdeen City Aberdeenshire 107 64 13 120 N/A* 1,172

Scotland 5,976 20,209 9,626 Source; Annual S1B return - Housing for older people and those with disabilities, Scottish Government, 2009 *Monitoring systems are currently being implemented

5.28 Figure 5.4 below shows waiting list information for Aberdeen City and illustrates that the demand for wheelchair accessible accommodation has
71

Communities Scotland, 2007 www.scotland.gov.uk/resource/doc/1035/0090728.xls

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declined over the 3 year period Around 60% of those applicants who require an accessible property use their wheelchairs both indoors and outdoors and will require barrier free housing. Figure 5.4: Wheelchair applicants
140

120

100

80

Wheelc hair Applic ant s Tot al who use wheelc hair s indoor s

60

40

20

0 Mar - 06 Mar - 07 Mar - 08 Mar - 09

Source: Aberdeen City Councils waiting list information

5.29 In March 2009 in Aberdeenshire there were 206 applicants with a ground floor property requirement on Aberdeenshire Councils waiting list, which was an increase on the 178 applicants from March 2008. As the data provided by Aberdeen City Council (see Figure 5.4) is in relation to demand for wheelchair accessible properties, it is not directly comparable to the figures from Aberdeenshire. This is because individuals with a ground floor requirement may not require a wheelchair accessible property. 5.30 In Aberdeen City and Aberdeenshire, Environmental Control Systems linked to telecare/community alarm services have been provided in order to support people with complex needs to remain in their own homes, preventing hospital and/or residential care admission. Learning Disability 5.31 Table 5.7 shows that, according to projections, the number of persons with a learning disability in Aberdeen and Aberdeenshire is increasing at a faster rate than the rest of Scotland; the rate of change from 2006 to 2031 is 9%, whereas the Scottish average is 6% within this timeframe. 5.32 These prevalence rates above show only those between the ages of 16 and 64.

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Table 5.7: Prevalence estimates for people with learning disabilities

Age Group Overall low need medium needs high needs Overall low need medium needs high needs Overall low need medium needs high needs Overall low need medium needs high needs Overall low need medium needs high needs 2006 2,796 837 1,405 554 3,024 906 1,520 599 4,190 1,255 2,106 830 1,630 488 819 323 5,820 1,743 2,925 1,152 2021 2031 Aberdeen City 2,858 2,770 856 830 1,436 1,392 566 548 Aberdeenshire 3,028 2,851 907 854 1,522 1,433 599 564 Aberdeen HMA 4,238 4,047 1,269 1,212 2,130 2,034 839 801 Rural HMA 1,648 1,574 494 471 828 791 326 312 Aberdeen City and Shire 5,886 5,621 1,763 1,683 2,958 2,825 change -26 -8 -13 -5 -173 -52 -87 -34 -143 -43 -72 -28 -56 -17 -28 -11 -199 -60 -100 -39 % change -0.90% -0.90% -0.90% -0.90% -5.70% -5.70% -5.70% -5.70% -3.50% -3.50% -3.50% -3.50% -3.40% -3.40% -3.40% -3.40% -3.4% -3.4% -3.4% -3.4%

Overall 66,133 -3,979 -6% low need 19,806 -1,191 -6% medium 33,234 32,523 31,235 -1,999 -6% needs high needs 13,092 12,836 12,305 -787 -6% Source: Strategic Forecasts High Growth Scenario and application of 1997 prevalence based guidelines from Scottish Government Low Needs living in mainstream housing (including with family) with minimal support. Medium Needs living in mainstream housing (inc with family) with medium support.

1,165 1,113 Scotland 64,836 62,154 19,418 18,615

5.33 In Aberdeenshire there are 1,407 people with learning disability who currently receive a social work service.73 The profile of known adults with learning disability is as follows; 193 people live in supported accommodation, 108 people live in registered adult care homes, 562 people attend day services and 29 people are placed outwith Aberdeenshire. 5.34 Of those, 141 clients across Aberdeenshire require supported accommodation74. The majority of the clients with a learning disability requiring housing on the housing register have identified their preferred
73 74

As at December 2009 As at December 2009

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choice of location for being housed as the main towns in Aberdeenshire. There are variations in terms of the age profile and level of need across Aberdeenshire. There is a proportion of those who are older persons with a learning disability that are staying at home with elderly parents and so this need while it has not been identified as a high priority will become a significant factor in the medium term with regards to accommodation provision. 5.35 In Aberdeen City, due to the scarcity of resources only high priority cases are accepted onto the supported accommodation list. In December 2009, the group had 65 live applicants who have been assessed as high/urgent priority. Recent information has been collected on those living with older parents and 12 people who are at risk of moving to emergency placement have been identified. Housing tenure of those with a learning disability 5.36 The same as you? review75' signalled a fundamental change in the way services were provided for adults with learning disabilities. Increasingly services are no longer focussed on buildings, whether in a hospital or Day Centre. People with learning disabilities are now living in the community, often with their own tenancy in a house or small group accommodation. 5.37 5.38 Figure 5.5Figure 5.5 shows that in 2007 33% of adults with learning disability in Scotland had their own tenancy. In Aberdeen City the figure was 56%, while in Aberdeenshire 19% had their own tenancy. Figure 5.5: Percentage of Adults with Learning Disabilities living in their own tenancies,
60% 50% 40% 30% 20% 10% 0% Scotland Aberdeen Aberdeenshire

Source: Adults with learning disabilities implementation of http://www.scotland.gov.uk/Publications/2007/03/23090219/0 2007

the

same

as

you?

75

Adults with learning disabilities implementation of the same as you? Scotland 2007

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5.39 The higher figures in Aberdeen City can largely be attributed to a range of policy decisions, which has seen the establishment of a development programme to provide a range of supported housing options for people with learning disabilities. This was initially linked to the hospital resettlement programme, but development has continued with around 10-15 new properties established approximately every 2-3 years. This has resulted in 180 new placements (either tenancy or group accommodation). Table 5.8: Care Homes for Adults with Learning Disabilities; Beds, Homes and Residents; by sector and Local Authority, March 2006
LA/NHS Local Authority Aberdeen City Aberdeenshire Scotland Care Homes 5 5 45 Care Homes Aberdeen City Aberdeenshire Scotland 28 27 215 Registered Places 63 30 459 Voluntary Registered Places 160 144 1,492 Residents 145 132 1,342 Care Homes 34 36 330 Residents 55 17 325 Care Homes 1 4 70 Private Registered Places 7 29 955 All Sectors Registered Places 230 203 2,906 Residents 207 175 2,499 Residents 7 26 832

Source: Scottish Government, 2007

5.40 It is clear from Table 5.8 above that the number of Care Home places offered by the voluntary sector is significantly more than those provided by private and local authority/NHS sectors. The voluntary sector has had a range of funding avenues available for it to access, which has allowed for a larger proportion of the care homes being provided by them. Housing related circumstances and needs of those with a learning disability. 5.41 People with learning disabilities have a wide and varied range of needs that may change during their lifetime. Accommodation needs can vary from mainstream housing with support for those with mild to moderate learning disabilities or supported tenancies, grouped accommodation or registered care home facilities for those with complex needs. 5.42 By far the most support provided for those with learning disabilities is provided by parents, brothers and sisters and other relatives. Research suggests that:
76

25% of people with learning disabilities have a carer aged 65 or over; 20% have two carers aged 70 or over; and 11% have one carer aged 70 or over76.

The same as you? A review of services for people with learning disabilities, Scottish Government, 2003

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5.43 There is clear evidence that those with learning disabilities can feel powerless in making choices, with decisions on housing options being taken on their behalf by professionals and carers77 78. 5.44 The majority of individuals with learning disabilities can live in mainstream accommodation, however, the care model and the level of support will vary depending on the needs of the individual. For some, specialist design is required; in particular for people with autism. This may include features such as extra sound proofing, strengthening to the interior and assistive technology. 5.45 Group living and core and cluster models are often the preferred option for individuals with learning disabilities as this provides economies of scale in terms of support and a more appropriate environment for individuals. It is possible at times to use general needs housing to develop core and cluster modelling through the use of telecare. Telecare packages are being used by people with long-term needs, physical or learning disabilities and cognitive conditions such as dementia, providing round-the-clock preventative support and help to keep service users healthy, safe and in control in their own homes79. People with mental health or substance misuse 5.46 Stable housing is a fundamental need for all people, but this is especially true for individuals with substance misuse and mental disorders who also require varying levels of support commensurate with their needs. The preponderance of evidence indicates that supportive housing is an essential component of an effective overall therapeutic and rehabilitation strategy for individuals with dual diagnosis. 5.47 Individuals with substance misuse and mental disorders are at risk of homelessness, and constitute a highly vulnerable sub-population among the homeless. Moreover, service providers encounter great difficulty engaging mentally ill people who are living on the street80. The treatment of substance misuse and mental disorders cannot therefore be meaningfully considered in some circumstances where there is an absence of appropriate housing. 5.48 A variety of models of housing have been studied in relation to the needs of people with substance misuse and mental disorders. Housing may be peer-based or run by professional staff. Some housing models require abstinence and others do not. Supportive housing is itself a broad term that
McGlaughlin A and Gorfin L (2004), Enabling Adults with Leaning Disabilities to Articulate their Housing Needs, British Journal of Social Work 78 Fyson, R, Tarleton B and Ward L (2008), Support for Living? The impact of the Supporting People programme on housing support for adults with learning disabilities. The University of Nottingham and the Norah Fry Research Centre, University of Bristol. 79 York Health Economics Consortium at York University/Scottish Government Final Evaluation Report, Jan 09. 80 Tsemberis, S. & Eisenberg, R. F. (2000). Pathways to housing: supported housing for street dwelling homeless individuals with psychiatric disabilities. Psychiatr Serv, 51, 487-493
77

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refers to programs that provide a range of human services to meet the special needs of client populations, complementing some form of housing assistance e.g. case management, heath care, addiction treatment. A positive relationship has been reported between supportive housing and various measures of social and occupational functioning for persons with substance misuse or mental disorders. 5.49 Once housed, people with substance misuse and mental disorders require varying levels of support in order to maintain positive outcomes, (including the maintenance of stable housing). The effectiveness of housing services can be improved by matching the type and intensity of service to an individuals level of psychiatric and substance misuse severity. In particular, people with higher psychiatric and substance misuse symptoms seem to require housing, support, and case management combined, while those with lower levels of symptoms achieve similar outcomes with case management alone81. Supportive housing for homeless people with substance misuse and mental disorders results in superior retention in housing compared to case management or usual care in the community, and achieve these benefits with only modest increases in public costs.82 5.50 Local information sources relating to these needs is currently limited. However, staff working with these client groups have suggested a need for suitable longer term accommodation (long term supported housing) and a need for a transitional housing service. Families and Lone Parents 5.51 In 2001 around 1 out of every 4 households in Aberdeen City and Shire comprised of families or lone parents. In the intervening period the numbers and proportion of such households has fallen slightly to just under 25%. Looking ahead, Strategic Forecasts 2006 high growth scenario forecasts that if underlying trends remain unchanged, then: There will be 32,299 families living in Aberdeen City and Shire by 2021 (14%) and just 29,342 by 2031 (12%). There will be 12,258 lone parents living in Aberdeen City and Shire by 2021 (5%) and 14,250 by 2031 (6%).

5.52 As noted earlier (see Table 2.7 and 2.8 plus appendix 4 tables), in 2001 close to 8 out of 10 families across the Aberdeen City and Shire were owneroccupiers. By contrast Table 5.9 shows that over half of all lone parents rented from a social landlord. Since 2001 there appears to have been some increase in the numbers and proportion of lone parents who have been able
Clark, C. & Rich, A. R. (2003). Outcomes of homeless adults with mental illness in a housing program and in case management only. Psychiatric Services.Vol.54(1)()(pp 78-83), 2003.Date of Publication: 01 JAN 2003., 78-83.
82 81

Rosenheck, R., Kasprow, W., Frisman, L., & Liu-Mares, W. (2003). Cost-effectiveness of supported housing for homeless persons with mental illness. Archives of General Psychiatry.Vol.60(9)()(pp 940-951), 2003.Date of Publication: 01 SEP 2003., 940-951.

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to access owner occupation. This may be partly attributable to RTB sales in the period to 2004. Nonetheless 52% of lone parents in Aberdeen City continue to rent their home from a social landlord. Table 5.9: Tenure by household composition
Household type All Households Lone Parent with dependent child(ren) 27% 59% 14% 100% 35% 46% 19% 100% 38% 44% 18% 100% 27% 53% 20% 100% 30% 53% 16% 100% 27% 56% 17% 100% Couple with dependent child(ren) 77% 17% 6% 100% 82% 10% 8% 100% 84% 8% 8% 100% 78% 13% 9% 100% 80% 12% 7% 100% 78% 16% 6% 100% All lone parents and families 65% 27% 8% 100% 76% 15% 10% 100% 78% 13% 9% 100% 70% 20% 11% 100% 71% 20% 9% 100% 64% 27% 9% 100%

Aberdeen City Owned 61% Social Rented 27% Private 12% Total 100% Aberdeenshire Owned 71% Social Rented 19% Private 10% Total 100% Aberdeen HMA Owned 73% Social Rented 17% Private 10% Total 100% Rural HMA Owned 67% Social Rented 22% Private 11% Total 100% Aberdeen City and Shire Owned 66% Social Rented 23% Private 11% Total 100% Scotland Owned 63% Social Rented 27% Private 10% Total 100% Source: 2001 Census Table CAS056

Housing circumstances and needs of families and lone parent households 5.53 Although not comparable with the bedroom standard applied in most social landlord allocation policies, the Census evidence suggests that in 2001, 10% of families and lone parent households across Aberdeen City and Shire were overcrowded compared to 15% across Scotland83. Of the 49,312 families and lone parent households in Aberdeen City and Shire, 4,888 were considered to be overcrowded of which 42% were in the social rented sector compared to only 6% in the owner occupied sector.
83

The occupancy rating provides a measure of under-occupancy and overcrowding. 1 implies that there is one room too few and that there is a overcrowding in the household. Census 2001.

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5.54 Moreover, Table 5.10 demonstrates that: The incidence of overcrowding amongst families in Aberdeen City and Shire and its constituent sub-areas is lower than the rate for Scotland as a whole, with the exception of Aberdeen City. A similar picture is evident in respect of lone parents; and This higher incidence of overcrowding in Aberdeen City partly reflects the greater incidence of smaller dwellings (3 or less bedrooms) in the City relative to Aberdeenshire. It also reflects the fact that the incidence of overcrowding is much more prevalent in the rented sector, and in particular the council sector, than in the owner occupied sector.

Table 5.10: Families and Lone Parents defined as overcrowded by tenure

Aberdeen City Aberdeenshire Aberdeen HMA Rural HMA Aberdeen City and Shire Scotland

Couples With Dependent Children All Tenures 12% 6% Owned 7% 4% Council 31% 20% RSL 25% 12% Private 15% 7% Lone Parents with Dependent Children All Tenures 22% 13% Owned 13% 7% Council 25% 18% RSL 22% 11% Private 27% 14%

9% 5% 29% 21% 12%

7% 5% 21% 10% 8%

8% 5% 26% 17% 10%

12% 8% 27% 23% 15%

19% 10% 24% 19%

14% 9% 18% 12%

18% 10% 23% 17%

23% 16% 26% 25%

25% 12% 20% 26% Combined Households with Dependent Children (couples and lone parents) All Tenures 14% 7% 11% 8% 10% 15% Owned 8% 4% 6% 5% 6% 9% Council 28% 19% 27% 20% 25% 27% RSL 23% 11% 20% 11% 17% 24% Private 20% 9% 16% 9% 14% 21% Percentages relate to the proportion of families and lone parent households considered as overcrowded by tenure Source: Census 2001 (Table CAS053)

5.55 Housing register evidence used to inform the assessment of backlog need (i.e. only applicants that had valid application and had applied since 2006) suggests that in autumn 2009 some 2,700 applicants on the Aberdeen City or Aberdeenshire housing register had a valid needs application and points for overcrowding. Almost 8 out of 10 of these applicants were families (35%) or lone parent (44%) households.

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5.56 Of the 2,125 family and lone parent applicants on the Aberdeen City (1,345) or Aberdeenshire (780) housing register that had been awarded overcrowding points: Around 1 out of 3 are existing tenants of a social landlord. The percentages in both local authorities areas are reasonably similar. Moreover, overcrowding is the main reason this sub-group of families and lone parents state for seeking re-housing. Most other families or lone parents are either renting from a private landlord or are living with friends or relatives, although in both local authority areas lone parents are more likely than families to be living with friends or relatives. Less than 10% are owner-occupiers. Loss of employment or relationship breakdown are the most common reasons for those seeking re-housing; this indicates that working age households that have bought their home generally prefer to remain in this sector unless forced to move. This is further supported by our findings in Chapter 6 whereby comparisons with the Scottish Household Survey and Scottish House Condition Survey evidence suggests that for the most part owner-occupiers do not apply to social rented housing and furthermore the 2004/5 Survey of English Housing (SEH) indicates that less than 5% of owners would live in social rented housing if it was available.

5.57 It can be assumed that the national and local policy decisions to give greater priority to homeless households and had reduced the number of internal transfers and has contributed to some growth in the numbers of family and lone parent households living in overcrowded housing in the social rented sector. However, the lack of 3 and more especially 4 bedroom dwellings that are available for occupation because of first lets of newly completed dwellings or re-lets of existing stock, as discussed in chapter 3, are also contributing factors. Ethnic Minorities 5.58 As Chapter 2 notes there was some increase in the ethnic population in Scotland and across Aberdeen City and Shire between 1991 and 2001. 5.59 Table 5.11 shows the age distribution and changes within the ethnic minority population between 1991 and 2001. It shows that at Aberdeen City and Shire level there was some increase in the proportion of ethnic minorities across all age bands, but the most significant were within the 0-15 year old and 16-29 year old age bands. This is mainly attributable to the increase in

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16-29 year olds in Aberdeen City, which in turn reflects the increase in the numbers of international students over this period84. Table 5.11: Ethnic Minorities as proportion of population by age band
Aberdeen Aberdeenshire (%) 1991 2001 0.7 1.1 0.5 0.8 0.6 0.8 0.2 0.1 0.1 0.3 0.5 0.2 0.1 0.7 Aberdeen HMA (%) 1991 2001 NA 2.9 NA 3.1 NA 2.1 NA NA NA NA 0.8 0.4 0.3 2.0 Rural HMA Aberdeen City and Shire (%) 1991 2001 1.1 2.6 1.0 2.9 1.0 1.9 0.3 0.1 0.1 0.7 2,908 0.8 0.4 0.3 1.8 7,779 Scotland

0-15 16-29 30-49 50Pensionable Age Pensionable Age 74 75+ Total Number

(%) 1991 2001 1.6 4.7 1.5 4.3 1.4 3.1 0.4 0.1 0.1 1.1 1.2 0.5 0.4 2.9

(%) 1991 2001 NA 0.9 NA 0.6 NA 0.6 NA NA NA NA NA 0.4 0.2 0.1 0.5 606

1991 2.1 1.6 1.4 0.7 0.2 0.1 1.3

(%) 2001 3.0 3.2 2.1 1.0 0.7 0.4 2.0 101,677

2,234 6,151 674 1,628 NA 7,173 Source: Scottish Government and Census 1991 and 2001 Note: Pensionable Age = 60 for Women and 65 for Men Note: NA = Figures Not Available

62,634

5.60 Over the decade to 2001 the numbers of households represented by someone from an ethnic minority also increased at the national and local level. As shows, upwards of 9 out 10 ethnic minority households lived in the Aberdeen HMA in 2001, the large majority of whom lived in the City. Table 5.12: Ethnic Minority Households, 1991 and 2001
1991 No. of Ethnic Minority Households 875 211 NA NA 1,086 1991 % of Total Households 2001 No. of Ethnic Minority Households 2,023 451 2,256 218 2,474 30,649 2001 % of Total Households 2.1% 0.5% 1.4% 0.4% 1.3% 1.4%

Aberdeen City 1.0% Aberdeenshire 0.3% NA Aberdeen HMA NA Rural HMA Aberdeen City 0.7% and Shire 15,920 Scotland 0.8% Source: Scottish Government, 1991 and 2001 Census Note: NA = Figures Not Available

The Economic Impact of International Students in Aberdeen City Briefing Paper 2008/03Aberdeen City Council http://www.aberdeencity.gov.uk/nmsruntime/saveasdialog.asp?lID=16524&sID=3365
88

84

Improving understanding of the Housing circumstances of ethnic minorities in Aberdeen City/ Aberdeenshire 2004, Heriot Watt University. In addition, the Ethnic Minority Forum: Community Engagement Event - Promoting Good Relations, Have your Say, was held in 2008/9 in Peterhead and included ethnic minority community representatives from across the SPA. After the event an action plan for the housing issues raised at the event was prepared, many of which coincided with the findings of the Heriot Watt research again no bricks and mortar issues were raised as part of the action plan.

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Housing Related Circumstances and Needs of Ethnic Minority Households 5.61 Table 5.13 shows the housing tenure for the ethnic minority households and the changes which have occurred between 1991 and 2001. It indicates there was a much greater increase in the numbers and proportion of ethnic minority households renting privately relative to the numbers in the other main housing tenures. In particular the numbers of households renting from a private landlord that were represented by an ethnic minority householder more than doubled in Aberdeen. This is consistent with the earlier finding that most of the growth in ethnic minority population was the result of an increase in the international student population. Table 5.13: Housing Tenure of Ethnic Minority Households, 1991 and 2001
Tenure Aberdeen Aberdeenshire Aberdeen HMA (%) 1991 2001 NA 1.0 NA 1.2 NA 4.8 Rural HMA Aberdeen City and Shire (%) 1991 2001 0.6 0.9 1.7 1.1 0.7 4.3 Scotland

Owned Social Rented Private Rented

(%) 1991 2001 0.8 1.4 0.9 1.5 2.9 6.8

(%) 1991 2001 0.3 0.5 0.1 0.4 0.5 1.0

(%) 1991 2001 NA 0.4 NA 0.4 NA 0.8

(%) 1991 2001 1.0 1.3 0.3 0.9 2.6 3.5

Source: Scottish Government, 1991 and 2001 Census Note: NA = Figures Not Available

5.62 The 2001 Census provides some insight into the 3 indicators of potential housing stress- overcrowding, lack of standard amenities and lack of central heating. 5.63 In 2001 the proportion of ethnic minority households living in overcrowded housing conditions was lower than for the household population in both local authorities. Likewise, there was no evidence that ethnic minority households were more likely to lack the use of shower/ bath or other standard amenities. 5.64 In 2001, as in 1991, ethnic minority households were somewhat more likely than other households to live in a dwelling that lacked central heating. The most likely explanation for this is that in 2001 fewer private rented sector dwellings contained central heating than owner occupied or social rented dwellings. 5.65 The only readily accessible and routinely collected data on the housing needs and demands of households, including those from an ethnic minority background is the two local authority-housing registers.

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Table 5.14: Number of applicants by ethnicity and bedrooms required as at 31/03/09

1 Bed Any Ethnic White Total 86 4172 4258 % 2 Bed 63 1,435 1,498 3 % Bed Aberdeen City 32% 37 19% 23% 432 7% 24% 469 8% Aberdeenshire 31% 64 17% % 4 Bed 4 38 42 % 5+ Bed 1 0 1 2 85 87 % Total

45% 69% 68%

2% 1% 1% 5% 4% 4%

1% 0% 0% 1% 1% 1%

191 6,077 6,268 366 6,689 7,056

Any 167 46% 113 20 Ethnic White 3,936 59% 1,540 23% 867 13% 261 Total 4,104 58% 1,653 23% 931 13% 281 Source: Aberdeen City Council, Housing & Environment Service Source: Aberdeenshire Council, Housing & Social Work Service

5.66 Table 5.14 indicates that some 5% of applicants on the Aberdeenshire housing register and 3% in the Aberdeen City housing register were from an ethnic minority background. It also appears that households from an ethnic minority background (certainly in Aberdeenshire) are less likely to be assessed to need 1-bedroom than other applicants. One reason for this is that applicants from an ethnic minority background may be more inclined to apply once they have decided to start a family and remain in the area. However this warrants further analysis. 5.67 Over the past 3 years or so the proportions of lettings made to applicants from an ethnic minority background have fluctuated between 3% and 4%. This is very slightly lower than the proportion of applicants. This difference is in the main due to the high numbers of lettings going to homeless applicants and the greater turnover of bedsit and 1-bedroom properties. 5.68 Heriot Watt University research (dating from 2004) on the housing circumstances of ethnic minority households in Aberdeen City and Shire88 concluded that brick and mortar solutions were not necessary. However, they did suggest that perhaps other barriers such as language, lack of information, limited awareness of RSLs and issues around harassment may prevent members of the ethnic minority community realising their housing aspirations. 5.69 Subsequent to completion of this study an Ethnic Minority Outreach Worker has been appointed. Feedback from this officer during 2009 suggests that the housing needs of those from an ethnic minority background are very similar to those of the indigenous population. However, there remain some specific housing management issues around harassment and racist incidents, especially in the City. In addition, there remain problems around language barriers which can make the application process more confusing and make it more difficult to find out about and explore alternative housing option, including those provided by RSLs.

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EU Migrants 5.70 As referred to in Chapter 2, there has been a sharp rise in the numbers of migrants from Poland and other European Union (EU) countries subsequent to the 2004 enlargement of the EU. 5.71 Research by UHI PolicyWeb (University of the Highlands and Islands) 89 during 2006/7 concluded that migrant workers have no particular housing needs over and above the general population in Aberdeen and Aberdeenshire. The report found that the housing experiences of migrant workers were similar to those of the local population seeking housing. Thus migrant workers in common with other lower income households often find it difficult to afford the high rents charged in the market-orientated and readily accessible segment of the private rental market and often had little option but to live in multiple occupied and overcrowded housing. 5.72 UHI PolicyWeb also pointed out that migrant workers were beginning to access social rented housing, but sounded a note of caution that there was some evidence that perhaps migrant workers tended to be allocated housing in less popular areas. 5.73 Table 5.15shows that in the 3 years to March 2009, the numbers of A8 and A2 nationals on the council housing waiting lists90 has increased, albeit by a relatively modest number. Table 5.15: A8 & A2 Council Housing Register Applicants as at 31 March 2007-09
2007 Aberdeen City Aberdeenshire Aberdeen City and Shire 731 60 791 2008 791 101 892 2009 877 95 972

Source: Aberdeenshire Council, Housing & Social Work Service Source: Aberdeen City Council, Housing & Environment Service

5.74 In the 3 years to March 2009, the ratio of the number of lettings to migrant workers for every migrant worker applicant has been broadly in line with the overall lettings to applicant ratio for Aberdeenshire, as reported in section 3 (Table 5.16). In Aberdeen City, a similar picture was evident in 2006/7 and 2007/8. However, the numbers of lettings to migrant workers in Aberdeen has declined since spring 2008, in part because of the sharp fall in Council re-lets and in part because of the policy decision to increase the share of re-lets allocated to homeless applicants.

A Study of Migrant Workers in Grampian February 2007 http://www.aberdeencity.gov.uk/nmsruntime/saveasdialog.asp?lID=9121&sID=4677

90

89

Aberdeen City Councils Housing Application forms detail the countries of origin of applicants. Although this level of detail is not currently listed on the Aberdeenshire Councils application forms, with the introduction of the new Common Housing Register (CHR) which includes the Moray Council and local Housing Associations, this information will be captured.

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Table 5.16: A8 and A2 applicants housed 2006/07 to 2008/09

2006/07 2007/08 2008/09 No ratio No Ratio No ratio lettings lettings lettings Aberdeen City 403 1.8:1 383 2.1:1 218 4.0:1 Aberdeenshire 13 4.6:1 15 6.7:1 10 9.5:1 Aberdeen City 416 1.9:1 398 2.2:1 228 4.3:1 and Shire
Source: Aberdeenshire Council, Housing & Social Work Service Source: Aberdeen City Council, Housing & Environment Service

Gypsies/ Travellers 5.75 The Scottish Government considers Gypsies/ Travellers as a distinct ethnic grouping. Craigforth (2009)91 estimate that in 2008 some 373 Gypsies/ Travellers resided in Aberdeen City and Shire. This equates to 0.1% of the population in the Aberdeen City and Shire and some 15% of the Scottish Gypsy/traveller population. Table 5.17 shows that in terms of actual households, around 56 households from the Gypsies /Travellers community resided in Aberdeen City and a further 50 were living in Aberdeenshire. Table 5.17: Estimated Population of Gypsies/Travellers in Aberdeen City and Shire by Local Authority and Type of Site, July 2008. Aberdeen Aberdeen City Aberdeenshire City and Shire**
Households People * Households People* Households People

Council Sites Encampments Housed Private Sites Total**

15 20 6 15 56

53 70 21 53 197

20 21 6 3 50

70 74 21 11 176

35 41 12 18 106

123 144 42 64 373

*NB People=Householdsx3.5 (Craigforth) **Total columns are the sum of the households and people columns Source: Craigforth Report1

5.76 Craigforth suggest that a very minimum of 12 households from the wider Gypsy / Traveller community live in permanent accommodation across Aberdeen City and Shire. Most are believed to live in council housing, although a small number may have purchased private housing. However, it is extremely difficult to determine precisely how many households from the wider Gypsy/Traveller community now live in permanent housing or are seeking council housing. In particular applicants are often reluctant to self identify as Gypsies/ Travellers on application forms. 5.77 As Table 5.18 indicates, in July 2008 there were 61 pitches across Aberdeen City and Shire. At that time some 27% of Gypsies/ Travellers households in Aberdeen were located on the Council site with 36% on encampments. In Aberdeenshire roughly similar proportions of the population
Accommodation Needs Assessment of Gypsies/ Traveller in Grampian. Report by Craigforth, May 2009 http://www.aberdeenshire.gov.uk/privatehousing/Travellers.asp
91

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were found on council sites (40%) and encampments (42%). However, the Aberdeenshire figures fluctuate considerably during the year because the sole permanent traveller site is open only on a seasonal basis. Table 5.18: Number of Pitches provided by Site Type, 2008. Aberdeen Aberdeenshire Aberdeen City City and Shire
Authorised Council Sites Commercial Sites (caravan site) Private Sites Total Pitches 21 5 15 41 20 0 0 20 41 5 15 61

Source: Accommodation Needs Assessment of Gypsies/Travellers in Grampian, Craigforth Consultancy and Research 2008

5.78 Craigforth also confirmed that a small number of Gypsies/ Travellers sometimes set up unauthorised sites and suggested that may be because of the lack of availability of other authorised sites, particularly at certain times of the year, and /or socio-economic status. 5.79 Based on analysis of quantitative and qualitative evidence, Craigforth concluded that there is a need to review local planning policies in respect of the development of private Gypsies/ Travellers sites and to review future options in respect of Greenbanks site in Aberdeenshire and the Clinterty site in Aberdeen. In addition, the study team pointed to a need for Aberdeen City and Aberdeenshire to investigate the possibility of sharing transit sites with a maximum capacity of six pitches per site. Other Travelling People 5.80 The term gypsy traveller does not include occupational travellers, such as travelling show people or new age/ new Travellers. Within Aberdeen City and Shire, there are few, if any, known new age travellers. 5.81 Travelling show people mainly consist of self-employed business people who travel the country, often within extended family groups, holding fairs or circuses and do not tend to share the same culture or traditions as Gypsies and Travellers. Many of these people have been taking part in this lifestyle for generations. Travelling show people regularly use sites agreed by both local authorities to hold their funfairs/circuses throughout the summer. However, as few, if any, have winter quarters in the area, it does not appear that they have any ongoing housing requirements. Students 5.82 Students are a vital component of the Aberdeen City and Shire population, with two universities and two colleges of further education. In terms of housing issues, there is no evidence to suggest that Banff and Buchan College students have any particular housing needs to create consequential housing issues that need to be addressed. Page 136

5.83 However, full-time students account for some 12% of Aberdeen Citys population (Table 5.19). While some students at city institutions commute from their parental home (Including from Aberdeenshire), many students, especially those pursing full-time higher education move to the City to pursue their studies. Table 5.19: Students by institution STUDENTS BY INSTITUTION Further and Higher Education Student Numbers 2008/09
Robert Gordon University University of Aberdeen Aberdeen College Banff and Buchan College Total
Source: Behind The Granite 2008/09

Full Time Part Time Total 15,538 9,292 15,500 13,000 34,314 5,534 1,541 14,501 66,893 42,327

24,830 28,500 39,848 16,042 109,220

5.84 Table 5.20 shows that the universities and private student accommodation providers supply some 7,114 units throughout the city. Although definitive data is not available, it is known that there has been a significant decline in the level of student accommodation provided directly by Robert Gordon University (RGU) and Aberdeen University having disposed of several sites. To a large extent this has been offset by the increased provision by the private student accommodation providers. Table 5.20: Existing Student Accommodation Existing Specialist Student Accommodation (No. of Bed Spaces) Aberdeen University 3025 RGU 1500 Unite 1821 Hunter 125 Ardmuir 643 Total 7,114

Source: University/Company Websites

5.85 Traditionally student accommodation is only provided for first year students and in particular special circumstances thereafter92. Most other students rent from a private landlord, although some rent from a social landlord and some live in properties purchased by their (or their friends) parents, usually at the lower end of the market. 5.86 Evidence from the Council Tax register suggest that in autumn 2009 some 3,812 residential dwellings were in receipt of student exemption, over 9 out of 10 of which were in the private sector (Table 5.21). Many of these properties are likely to accommodate 2 or more students.
Robert Gordon University report that to ease the over demand for accommodation they book rooms with the Youth Hostel from mid September to early October. This short-term measure reflects the fact that some students leave University within the first few weeks and that these departures then make room for those in temporary accommodation. International students who buy a lease remotely are also entitled to a "Cooling Off" period. Some of these students will not take up their accommodation because they find alternate accommodation through cultural networks and friends.
92

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Table 5.21: Other Student Accommodation Other Student Accommodation (properties with Student Exemption for Council Tax) Private ACC Langstane Grampian Castlehill 3,484 261 36 21 10
Source: Information from ACC Council Tax database, November 2009

5.87 There is a strong perception that the high levels of student demand for housing has been one factor that may have contributed to the tightness of the local housing market as evidenced by the high private rents and house prices as reported in chapter 3. 5.88 As far back as 2003, Heriot Watt (2003)93 reported that the lack of affordability of the private rented sector was a major problem facing international students with families because of the phasing out of university accommodation for families. 5.89 More recent evidence indicates that the lack of private lettings at the lower end of the private rental market relative to the demand from students and other young households at the start of their housing career is adding to pressure for social rented housing. Aberdeen City Council has seen an increase in the number of students, applying as homeless. 5.90 Historically, Aberdeen City Council did let low demand properties direct to the universities, properties were used to house overseas students who had no recourse to public funds. The Council can only enter into such an arrangement for hard to let property. There are currently 20 to 30 flats rented to Aberdeen University through this procedure. These properties will be returned to ACC as the current occupants end their studies or move out. As a result of increasing demand, the Council now has only a handful of hard to let property. This option may not therefore be possible in the future. 5.91 More generally, faced with growing demand, fewer lettings, and a need to meet the 2012 homeless priority need target, it is likely that fewer student households will be able to secure social rented tenancies in the near future.

Homeless Households 5.92 Figure 5.6 shows after a period of decline at the end of the nineties and start of this decade, which coincides with the last local economic recession, the numbers of homeless applicants in the Aberdeen City and Shire area has risen sharply in the 5 years to 2008/9 inclusive.

Improving Understanding of the Housing Circumstance of Minority Ethnic Communities in Aberdeen City

93

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Figure 5.6: Number of Homeless applicants from a benchmark of the number of applications made in 1998/99
160 150 140 130 120 110 100 90 80
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Scotland

Aberdeen City and Shire

Aberdeen City

Aberdeenshire

Source: Scottish Government Homeless Statistics, Sept 2009 and March 2010

5.93 In the year to March 2009, some 4,342 households applied to either Aberdeen (2,796) or Aberdeenshire (1,546) as homeless. In the 18 months to January 2010, the numbers of households applying as homeless has begun to level out across Aberdeen City and Shire. However it is too soon to know if this trend will continue in the longer term. In the case of Aberdeen, the fall in the numbers of presentations in the past 10 months is consistent with a change in policy whereby housing options are explored with households that approach the homeless service. 5.94 Over half of all homeless applicants in Aberdeen City and Shire (55%) lived with family, other relatives or friends prior to applying, which is somewhat higher than the Scotland wide figure (46%). As elsewhere in Scotland the most frequently cited reason applicants give for applying as homeless are: Dispute within household or relationship breakdown (26% Aberdeen City and 13% Aberdeenshire) Asked to leave (19% Aberdeen City and 38% Aberdeenshire) Other reason for leaving accommodation/household (21% Aberdeen City and 10% Aberdeenshire)

5.95 The numbers of applicants assessed as homeless (or potentially homeless) throughout Scotland changed little in the 5 years to 2008/9 inclusive. By contrast, the numbers of homeless applicants accepted as homeless across Aberdeen City and Shire continued to rise. In 2004/5 some 1,068 applicants were accepted as homeless but by 2008/9 this figure had increased to 2,985. Most of this increase has occurred within Aberdeen City, which is believed to reflect improved local practice.

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5.96 Consistent with the high priority both local authorities give to achieving the Scottish Government 2012 target to abolish priority need, almost 87% of all applicants accepted as homeless in 2008/9 were classed as priority need. The comparable Scotland wide figure was 83%. 5.97 Although some 64% of all homeless applicants in Aberdeen City and Shire are single persons, there has been some increase in the numbers of applicants with larger households, most of whom are single parents and to a lesser extent couples with children. In 2008/9 some 26% of applicants across Aberdeen City and Shire contained one or more dependent children. 5.98 Faced with a fall in the number of lettings available and an increase in the numbers of households accepted as homeless, both local authorities have had to increase the use of temporary accommodation and to some extent B&B accommodation. For example, Aberdeen Council has increased the number of properties used as temporary furnished accommodation from 6 flats in 2002/03 to 157 flats in February 2010, including properties suitable for people with mobility difficulties. Young Vulnerable Adults, especially those under 17 years old 5.99 In this section the particular needs of young vulnerable adults are examined, focusing on those aged 26 and under, but especially those under 17years old, who are either homeless or at risk of homelessness and those leaving care.94 5.100 Chapter 2 profiled the changes in the general population structure and essentially across Aberdeen City and Shire over the period 1998 to 2008 the number and proportion of all young adults fell slightly to 64,996 or 14% of the total population. If underlying trends remain unchanged then the Strategic Forecasts 2006 high growth scenario projects that across Aberdeen City and Shire: There will be 9,377 16-17 year olds by 2031, just under 2% of the total population. There will be 50,583 18-26 year olds by 2031, just over 10% of the total population.

5.101 More specifically, in terms of young vulnerable adults there has been a steady increase in the number of homeless applicants across Aberdeen City and Shire. Table 5.22 demonstrates that during the period 2002-2009:

Councils have a corporate parenting role for young people in or leaving care under the Support and Assistance of Young People Leaving Care (Scotland) Regulations 2003, there is an obligation for local authorities to help young people leaving care to plan for independent living and currently Aberdeenshire provide accommodation for those leaving care through the homelessness route; this is widely acknowledged as poor practice. Aberdeen City provide accommodation through Betterways and Next Stage Housing Programmes.

94

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Across Aberdeen City and Shire, just under half of all homeless presentations are from those aged less than 26 years old. Within Aberdeenshire although there has been a steady increase in the number of 16-17 year olds presenting as homeless, this group has consistently comprised 10% of all presentations. By contrast, the number of under 26 year olds has steadily increased over the period, the proportion of this group has increased from 26% in 2002/03 to 35% in 2008/09. The reasons for this are difficult to discern but given future legislative changes this is likely to have an impact on presentation rates especially in the under 26 year olds. 95 Within Aberdeen City the proportion of 16-17 year olds presenting has fallen from 13% in 2002/03 to 8% in 2008/09, although the numbers presenting over the period has increased slightly. Likewise the proportion of homeless applicants aged under 26 year olds in the City has remained consistent at around 34% but the actual number of applicants has increased sharply. There are various reasons for this increase, for example, in the City 16- 26 year olds have been given automatic priority since 2008 and this age who would normally have looked to access the private housing market are finding it more difficult with rising house prices and private sector rents.

Table 5.22: All Homeless Applicants by Age

2002/03 Aberdeen City 16-17 Under 26 All ages Aberdeenshire 201 538 1,579 2003/04 198 600 1,841 2004/05 198 549 1,623 2005/06 250 624 2,074 2006/07 232 723 2,300 161 467 1,568 2007/08 212 819 2,376 165 518 1,587 2008/09 228 1,068 2,787 149 559 1,575

16-17 115 121 135 147 Under 26 290 333 363 407 All ages 1,107 1,191 1,327 1,485 Aberdeen City and Shire 16-17 316 319 333 397 Under 26 828 933 912 1,031 All ages 2,686 3,032 2,950 3,559 Source: Aberdeen City and Aberdeenshire HL1 returns Please note that figures for Aberdeenshire are banded 18-25 for the 18-26 for the period 2007/08-2008/09

393 1,190 3,868

376 1,330 3,943

409 1,866 5,038

period 2002/03 to 2006/07 and

5.102 Typically the main reason for single people aged under 26 years presenting as homeless is family and friends no longer willing to accommodate. 5.103 In terms of those leaving care, Table 5.23 demonstrates that although the numbers of young people leaving care are fairly small, they have increased over the period 2006-2009. Previous practice in Aberdeenshire will have meant that the majority of this group will have been re-housed through the 'homeless route; this practice is currently being reviewed.
95

Craigforth Consultants. A Temporary Accommodation Strategy for Aberdeenshire 2008

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Table 5.23: Number of 16 or 17 year olds ceasing to be looked after Aberdeen Aberdeenshire Aberdeen City City and Shire
Number of 16 or 17 year olds ceasing to be looked after at home 24 2006/2007 2007/2008 20 2008/2009 27 Number of 16 or 17 year olds ceasing to be looked after away from home 2006/2007 11 2007/2008 39 2008/2009 36 Number of 16 or 17 year olds ceasing to be looked after 2006/2007 35 2007/2008 59 2008/2009 63
Source: Audit Scotland

11 10 17 17 7 16 28 17 33

35 30 44 28 46 52 63 76 99

5.104 In terms of future projections and young adults leaving care intelligence from local officers suggest that those who are looked after at home are less likely to require assistance in terms of rehousing than those looked after away from home. Based on this assumption Table 5.24 shows the likely numbers of those leaving care and requiring assistance in terms of re-housing. Table 5.24: Projected Numbers of Young People Leaving Care in Aberdeen City and Aberdeenshire
Young People Leaving Care 2009/10 Aberdeen City 36 Aberdeenshire 26 2010/11 27 40 2011/12 14 26 2012/13 28 N/A

Source: Social Care and Wellbeing Aberdeen City and Housing & Social Work Aberdeenshire N/A Not available

Housing Related Circumstances and Needs of young vulnerable adults, especially those under 17 years 5.105 In broad terms all young adults are at the start of both their housing and employment careers. However one of the largest issues facing young vulnerable people is their ability to access and maintain affordable accommodation; those leaving care are particularly at risk of homelessness. 5.106 Generally their inexperience of living alone and their lack of knowledge of basic independent living skills such as budgeting and housekeeping can mean many young people have difficulty or are unable to maintain their accommodation. They may well have other needs as well as a housing need for example education and employment needs, all of which can contribute to obtaining and sustaining their own accommodation.

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5.107 Addressing their housing need can often be critical to receiving the other support necessary to maintain independent living. The number of young people presenting as homeless and requiring some form of support has been increasing; local intelligence suggests that the form of support required can often be complex but that basic housing management and independent living skills support is increasingly required. In Aberdeen City around 1 million is used to provide support to young people taking up new tenancies, with around 800,000 being made available in Aberdeenshire. Households Fleeing Domestic Abuse or Violence 5.108 The numbers of homeless applicants fleeing domestic abuse or violence fluctuates from year to year but on average around 200 applicants are currently accepted as homeless each year because of domestic abuse or violence. 5.109 Although both councils are seeking to improve their support and mediation services for those suffering from domestic abuse, there is a strong perception that the main challenge is the need to increase the availability of suitable temporary accommodation and to improve the supply of affordable family housing. 5.110 The most common type of accommodation provided in these situations is through womens refuges and homelessness temporary accommodation. Currently there are just 3 womens refuges which provide 11 bed-spaces in Aberdeen and a further 20 spaces in Aberdeenshire. However, not all this accommodation is compliant with the Homeless Persons (Unsuitable Accommodation) (Scotland) Order 2004. In response to this shortfall of suitable temporary accommodation, Aberdeen is proposing to open two refuges in 2010/11 which will provide for 5 bed-spaces in a communal facility and 6 self-contained cluster flats.

Lesbian, Gay, Bisexual and Transgender Households (LGBT) 5.111 As stated in chapter 2 above it is difficult to estimate the number of LGBT in Aberdeen City and Shire. However applying national prevalence rates96 suggests that somewhere in the region of 5% of the Aberdeen City and Shire population may be LGBT. For Aberdeen City this would equate to 10,783 and in Aberdeenshire 11,311 people. 5.112 Both local authorities have equalities services which support and provide information to these diverse parts of the community. Work undertaken in support of this service indicates some members of the LGBT community experience harassment and other forms of discrimination that require a management solution as opposed to a bricks and mortar solution.
96

Understanding the Housing Needs of lesbian, Gay, Bisexual and Transgender (LGBT) in Scotland: a Guide for Social Housing providers and Homelessness Services (2009, Stonewall and the Scottish Housing Regulator)

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5.113 As elsewhere across Scotland, there remains a lack of hard evidence on the housing circumstances of the LGBT community. Many in the LGTB community do not self identify. Moreover, many organisations are hesitant to ask questions on sexual orientation because they see this as a privacy issue and/or an issue that may prompt objections and complaints from those asked. At present neither councils housing application form includes questions on sexual orientation. It is therefore not known how many households from the LGBT community are on housing register or have been housed by the local authorities. Bringing the evidence together 5.114 The ageing population indicates a need to ensure a range of suitable housing options for older people, including sheltered provision and service delivery tailored to the needs of older people within existing homes and communities. 5.115 Given the projected increase in older people households throughout Aberdeen City and Aberdeenshire, particularly from 2021, there is likely to be continuing growth in demand for aids and adaptations and housing support and other services to enable them to remain comfortably within their own homes. Furthermore, this growth in older persons households will likely translate into more demand for barrier free/varying needs standards houses. An increase in provision of these property types would allow for their existing property to be adapted and for individuals to be able to live in their homes for longer before requiring adaptations. 5.116 There is also a growing number and proportion of owner-occupiers who may well look to downsize in their 50s to 70s to either release property equity or find a new home which is more manageable. This is an area which will require monitoring to ensure that developers respond appropriately in terms of the mix and property type required. 5.117 A steady demand for ground floor and wheelchair accessible properties in Aberdeen City and Aberdeenshire and the growing proportion of the population claiming disability related benefits indicates that the need for specialist and adapted properties is likely to increase. At present there is a reliance on the social rented sector from those with a physical disability and so further investigation may be required with regards to Low Cost Housing Options to examine the potential of meeting the needs of this group through this tenure type. 5.118 The majority of individuals with Learning Disabilities can live in mainstream accommodation, however, the care model and the level of support will vary depending on the needs of the individual. 5.119 Across Aberdeen City and Shire there are a number of people with a learning disability who live in the family home; a proportion of these are living at home with a main carer over 65yrs old. It is important that mechanisms are

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set in place to ensure that appropriate housing provision, care and support are available should they need to be cared for within a different setting. 5.120 Households with mental health and substance misuse issues require not only stable housing but varying levels of housing support commensurate with their particular need. In Aberdeen City and Shire there has been an identified need for suitable longer term accommodation (long term supported accommodation) and a need for a transitional housing service. 5.121 The demand for telecare is likely to increase as is housing related support, in line with the increased incidence of households with functional dependencies. 5.122 Further evaluation needs to take place with regards to the changing role of sheltered housing and the role that it can play in the future to meeting housing need for the those individuals with a particular need. 5.123 Clearly there is a need for Aberdeen City and Aberdeenshire councils and the NHS to explore how best to respond and manage growing demand for adaptations and care packages in a period of funding constraint. 5.124 The proportion of family households is greater in Aberdeenshire than for the region as a whole with particularly significant proportions of lone parent households in Aberdeen City. Overcrowding, particularly within the social rented sector, due to the reduced number of transfers, homeless priorities and lack of supply in terms of 3 and 4 bedroomed dwellings is an issue which requires to be addressed. Policy responses may need to further consider the prioritisation of homeless households and also the use of planning policy, for example, development briefs, to ensure an appropriate future supply of housing provision in terms of house size and type. 5.125 There is a relatively small black and ethnic minority population, although the numbers of households from a black or ethnic minority group have increased in recent years. Recent research and other evidence supports our interpretation of the limited statistical evidence from the housing register and other sources that the affordable housing needs of ethnic minorities or EU migrants are very similar to those of the indigenous population. However, there remains housing management issues associated with discrimination and harassment. In addition, further consideration is required in terms of language barriers and accessing affordable housing. 5.126 Although there is a relatively small Gypsy Traveller population, recent research has identified that this group has a distinctive housing requirement which requires to be addressed. 5.127 The student market is an important element of the market, specific to areas with access to the educational institutions in Aberdeen City. High levels of student demand for housing are contributing to the pressure within the private rented sector and owner-occupied sector within specific areas of Aberdeen City, particularly at the lower end of the housing market. Further

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investigations regarding the possible options to boost private sector student provision as means of easing pressure at lower end of market are required. 5.128 There is a need to monitor the numbers of those households presenting as homeless to ensure an appropriate response in terms of housing provision, size, type and location. Given the commitment to meeting Scottish Government targets, it is likely that there will be continued pressure on affordable housing. Increasing numbers of young people aged 16 26 years presenting as homeless suggests that there will be continued pressure on affordable housing and likely increasing demand for housing support in order to prevent repeated homelessness. Increasing the supply of affordable housing is important in addressing homeless but equally further work is required in terms of the prevention of homelessness and the reliance on the use of temporary accommodation. 5.129 Data concerning some of these specific household groups remains under-developed; it is vital that reporting systems are set in place so that robust and timely data can be collated to inform strategic planning. An action plan detailing the areas to be addressed will be progressed to assist in the preparation of the next housing need and demand assessment. 5.130 The affordability model described in Chapter 6 does not separately identify the specific housing needs of these sub-groups, because in most cases data sources do not distinguish between them. 5.131 However, the bricks and mortar related requirements (as distinct from their support or specialist housing design needs) of the majority of these subgroups are taken into account in the model through their inclusion in the backlog count and newly arising need estimates.

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6. Central Estimate of Net Annual Need

Introduction 6.1 This section presents our central estimate of net annual housing need and the proportion of those in need likely to be in a financial position to pursue some form intermediate tenure. 6.2 As the repercussions of the credit crunch has shown, the future rarely continues in the same way as the past. Future policy decisions must therefore appreciate the inevitable uncertainty associated with all projections. This section therefore also examines the sensitivity of the central estimate to changes in the most significant assumptions. Table 6.1: Summary description of the Scottish Government recommended approach
Component Summary description The number of existing and concealed households assessed to be in need and require a move to some form of affordable housing provision at a specific point in time Estimate of current housing need This count must exclude households currently occupying affordable housing (i.e. tenants of social landlords) Wherever possible the count should also discount households that can afford market priced housing or would prefer an in-situ solution. (converted into) Backlog reduction Plus Newly forming households in need Plus Existing households that fall into need Equals Annual number of households in need Minus Annual supply of lettings Equals Net Annual housing need The potential shortfall (or surplus) in affordable housing provision required each year to meet need 1. The estimate of current need divided by the number of years over which this backlog is assumed to be eliminated. In line with Scottish Government guidance the time period has been set at 10 years The number of new households that will form each year and have insufficient income to access open market housing without assistance The annual number of existing households that own or rent a private dwelling that may experience a change of circumstances and can therefore no longer remain in the open market sector The total number of households that require some form of affordable housing in any single year The numbers of affordable housing that become available for occupation each year. This is the projected numbers of non-transfer relets in the Council and RSL sector plus the number of social rented units that have already secured funding and are should be completed and let for the first time during 2009 or the next couple of years.

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Summary description of model for assessing net annual housing need 6.3 The approach suggested in the Scottish Government (2008) guidance is summarised in Table 6.1. It involves adding current housing need and future housing need and then subtracting the projected affordable housing supply to arrive at an estimate of the net annual housing need. Strictly speaking therefore the model provides an estimate of the potential shortfall (or surplus) of affordable dwellings. . 6.4 The Scottish Government approach assumes that existing social renters in need will be re-housed within the sector. As this will create a vacancy for another household in need, internal transfers are therefore assumed to have a nil effect on the estimate of net annual housing need. It is therefore necessary to exclude social renters from the count of households in need and to exclude transfer lettings from the supply side of the equation. 6.5 The term affordable supply refers to the annual numbers of existing social rented properties that are likely to become available for permanent relet to homeless and waiting list applicants exclusive of transfer lets plus the annual number of first lets arising from the completion of affordable housing. 6.6 In terms of the annual flow of affordable dwellings the guidance suggests it may also be appropriate to take account of turnover in the existing intermediate housing stock such as shared ownership or other shared equity housing. The latter option has not been pursed. There are some 608 shared ownership units in the Aberdeen City and Shire Area (Scottish Housing Regulator, 2009) few become available for resale each year at present97. However, we plan to keep this working assumption under review. 6.7 As any housing need assessment is sensitive to assumptions built into the modelling exercise, we have sought to ensure that the main assumptions fed into the model and discussed with the Strategic Housing Market Partnership are made clear in the following paragraphs. 6.8 Where a range of alterative inputs is possible, we have tended to use more conservative input assumptions to produce the central estimate of net annual housing need. Housing Register dataset

6.9 Following discussion with the Strategic Housing Market Partnership, it was agreed that the Housing Registers maintained by each local authority should be used as the main data source for quantifying current (backlog) need and for projecting the numbers of existing households likely to fall into need each year. This was because:
Wallace (2008) notes that studies from England that suggest that turnover in the LCHO sector can be as low as 1% and rarely exceeds 5% in any single year. Locally, it appears that perhaps 5-15 LCHO units might come up for resale each year. It is also worth noting that a number of shared ownership residents have applied for social rented housing.
97

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No other single secondary data source collects information of the range of the housing need indicators and therefore cannot be used produce an estimate of backlog need that is free of double counting. National secondary data sources do not always provide timely, robust or comprehensive numbers

6.10 The Scottish Government (2008) encourage the use of Housing Register evidence but stress the need to ensure the data is robust. To ensure the underlying integrity of that housing register data, all applications received prior to January 2006 have been excluded from analysis. This is on the assumption that such applicants may have:

Experienced a change in their personal circumstances and consequently the data collected through their application form may no longer up to date Applied as a contingency against possible future need or have a housing problem that does not warrant immediate action

In addition, applications from households residing outwith the local authority area were discounted. Thus:

Apart from in a handful of exceptional cases, Aberdeen City residents that have applied to Aberdeenshire have been excluded from the analysis of the Aberdeenshire Housing Register (and vice versa). This has been done to minimise any risk of double counting households that had applied to both local authorities. Applications from households living elsewhere in the UK and/or overseas have been excluded because such applicants do not form part of the existing household population of the area.

6.11 A small number of suspended or deferred cases have also been discounted. A more detailed discussion of the steps taken to ensure the data was suitable for analysis is set out in appendix 8. 6.12 Table 6.2 summarises the numbers of applicants on the Housing Register at October 2009 and the numbers of cases used or discounted from the analysis presented in this chapter. It indicates that the needs assessment analysis is based on just over 70% of applicants on the Aberdeen City Housing Register and just under 70% of applicants on the Aberdeenshire Housing Register. 6.13 Although, existing social renters do not form part of the count of backlog need, they had been retained in the dataset used to explore housing need. This has allowed us to triangulate Housing Register based estimates of the incidence of each backlog need indicator with comparable estimates from

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other sources of evidence in order to ensure that Housing Register estimates do not conflict with the numbers available from other sources. Table 6.2: Housing Register data used to inform needs assessment
Numbers used to estimate incidence of backlog need indicators Waiting or Existing homeless social rented Total list tenant Aberdeen City Aberdeenshire 3,376 3,912 1,875 1,071 5,251 4,983 Total discounted records Pre 2006 applicant 1,467 895 Total HR applicants Applicant October 2009 outwith area etc 731 1,290 7,449 7,168

Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

Current (backlog) housing need 6.14 The term backlog need refers to the number of households in need at the point in time when the housing needs assessment is undertaken. It involves estimating the numbers of households that lack their own home and cannot afford market priced housing. It also includes households experiencing a dwelling not apposite for their specific circumstances. 6.15 The indicators of backlog need that have been used to estimate backlog need are:

Homeless households, including those living in temporary accommodation or threatened with repossession or eviction Concealed households, which refers to couples, families and lone parents that share accommodation with another household Involuntary sharing single person households, which have been defined as single person households aged 30+ years that share accommodation with another household. This age threshold was selected to minimise double counting with newly forming households falling into need (see below). Overcrowded households. Households living in a property in poor condition, which includes properties that are Below the Tolerable Standard, lack basic amenities or fail the serious disrepair component of the Scottish Housing Quality Standard. Households with mobility impairment or support needs that live in housing that is not suitable for the specific requirements.

6.16 The Scottish Government suggest that another possible indicator may be harassment from others living in the vicinity. Both local authorities policy is to use non-bricks and mortar actions to deal with harassment and antisocial Page 150

behaviour. Consequently, few cases of serious harassment are resolved through moving the victim to another dwelling. Moreover, those who are assisted to move do not necessarily appear on the housing register. The Strategic Housing Market Partnership therefore concurred to exclude this indicator. Incidence of backlog need 6.17 Table 6.3 shows the housing register based count of the incidence of each backlog need indicator. Table 6.3: Incidence of backlog need
Indicator Aberdeen City Aberdeenshire Aberdeen HMA Rural HMA 435 432 258 657 87 855

Homeless households or 903 798 1,266 insecure tenure Concealed 711 753 1,032 Involuntary sharer 382 429 553 Overcrowding 1,571 1,130 2,044 Dwelling in poor condition 0 139 52 Support needs 2,102 1,468 2,715 Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

6.18 Appendix 8 compares local authority wide Housing Register based estimates with alternative evidence and provides further details regarding the calculation of the count of backlog need. 6.19 Comparisons of the Housing Register derived estimates with alternative estimates suggest that both local authority housing registers tend to produce estimates towards the lower end of the range of available estimates for some indictors. More specifically, comparison with the Scottish Household Survey and Scottish House Condition Survey evidence suggests that owneroccupiers, and to a lesser extent private renters that live in poor condition homes, experience overcrowding or have mobility impairment or support needs that for the most part do not apply to social rented housing. Moving from the incidence of backlog need to a count of backlog need 6.20 It is not possible to sum the numbers in Table 6.3 to produce a count of backlog need because some applicants have more than one need. For example, concealed households may also live in overcrowded housing. Table 6.4 therefore shows the number of applicants with one or more needs. It should be noted that:

The proportion of Aberdeenshire Housing Register applicants in need assigned to the Aberdeen HMA and the Rural HMA is based on the stated first choice area preference of housing applicants counted as being in need.

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Consistent with Scottish Government Guidance, a 10% quota has been applied to convert the backlog count into an annual flow. In effect this assumes that the backlog need will be eliminated over a 10-year period. The Scottish Government suggest discounting households in need if such households could benefit from an in-situ solution. However, as discussed in appendix 8, very few applicants that occupy a separate privately owned or rented home have a need that could be readily resolved through an in-situ solution98. This is probably because households in need that would benefit from an in-situ solution generally do not apply for social rented housing. Thus, no deduction has been made for in-situ need. The Scottish Government also suggest discounting those that could afford market priced but acknowledge that income data is not always accessible and in particular that income data in respect of homelessness households is difficult to find. As appendix 8 discusses, the limited evidence available suggests that applicant incomes are much lower than for the population as a whole. Consequently, it has been assumed that no household assessed to be in current need can afford market priced housing.

6.21 Overall we estimate 7,362 households in the Aberdeen City and Shire Area are in current need. This figure falls to 5,390 households after existing social renters in need are screened out, of which:

3,755 seek to be re-housed in the Aberdeen HMA and the remaining 1,625 seek to be re-housed somewhere in the Rural HMA area. 2,560 are resident in Aberdeen City and are 2,820 are resident in Aberdeenshire.

Table 6.4: Numbers of household in current (backlog) need

Indicator Count of backlog need after adjusting for double counting Count of backlog need after discounting social renters Converted into annual flow (divide by 10) Aberdeen 3,882 2,560 256 Aberdeenshire 3,480 2,830 282 Aberde en HMA 5,317 3,760 376 Rural HMA 2,045 1,630 163 all 7,362 5,390 539

Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

98 Examples of in-situ solutions could include the provision of adaptations, an extension to address overcrowding or assistance in organising necessary repair work. As discussed in appendix X most applicants assessed to live in poor quality housing have other needs as do most applicants assessed to have modest medical conditions typically had other needs.

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6.22 We believe the figures reported in table 6.4 constitute a minimum level estimate in spite of the absence of a downward adjustment for in-situ need or affordability. 6.23 Although the Housing Register measures backlog need better than any other single secondary data source, it under-counts the numbers of existing households in their 30s to 50s living in private housing that have some form of housing need. 6.24 One reason for this, as already noted, is that this sub-group do not necessarily register for social rented housing. The 2004/5 Survey of English Housing (SEH) found that less than 5% of owners would live in social rented housing if it was available. This lends further support to our assumption that established households that fall into need and occupy separate private housing, particularly owner-occupiers; mostly prefer an in-situ or other market based solution rather than a move to the social rented sector99. 6.25 There are 1,082 valid non-transfer applications on the Aberdeenshire Housing Register that do not fall into one or more of the categories of backlog need. Looking more closely at this group:

567 are aged 30+ years, most of whom are private renters (61%) or owners (25%). Very few have needs points100 and it is striking that over half indicate that their main reason for applying is financial (34%) or other (28%) which tends to cover a range of personal circumstances. 515 are under 30 years, of which 340 have sharing points only (66%) and the remaining 180 have no points. In terms of the main reason for registering, the most frequently recorded reason is to set up independent home.

Of the 816 non-transfer Aberdeen City applicants that do not fall into one or more of the categories of backlog need:

294 are aged 30+ years. Most are private renters (71%) or owneroccupiers (28%) without needs points on the AA List - applicants occupying a separate home. In terms of the main reason for applying for re-housing, over half are recorded as not specified or other101. 522 are under 30 years. Some 70% had 10 family size points, which is consistent with single person applicants applying from the parental home or other shared accommodation and assessed to require separate housing. The remaining 30% have no needs points. In terms

99 It is widely acknowledged that the Aberdeenshire housing register under-counts housing need in parts of the Rural HMA where there is little or no social rented housing stock 100 Just 3 of these 567 applicants have been awarded needs points of any kind 101 The Aberdeen City reasons for applying are not the same as those used by Aberdeen Council. In particular the City does not record financial hardship as a standard category.

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of reason for applying, almost two out three are coded as without home of own or want separate home. 6.26 The above evidence suggests householders in their 30s to 50s that live in separate privately rented or owner occupied properties that apply for rehousing tend to be assessed by both local authorities as experiencing less severe need than other applicants. Overall, it seems reasonable to assume that the 861 applicants aged 30+ that have been excluded from the count of current need are more likely than applicants identified as being in current need, especially those without a separate home of their own, to have the financial resources to access suitable alternative private sector housing102. 6.27 It should also be noted the above evidence on applicants aged less than 30 years that have been excluded from the count of current need illustrates the considerable overlap between younger applicants and newly forming households. This lends further support to our decision to restrict the definition of involuntary sharers to those aged 30+ years in order to minimise the risk of double counting between backlog need and newly arising need. 6.28 Finally, our assessment assumes that all those in need register on a local authority waiting list. The estimate of current housing need therefore makes no allowance of the needs of households that have applied to one or more RSLs but have not applied to either local authority. Housing officers believe there are very few such households but there is little evidence to substantiate or refute this assumption. It is therefore planned to review this assumption following the introduction of the Common Housing Register in Aberdeenshire in 2010. Profile of households in current need 6.29 Figure 6.1 shows the tenure of the 5,390 of households in need by area whilst Figure 6.2 shows their household composition. Alongside Table 6.5 they indicate that:

There is little variation in the tenure of households in need. The City has a slightly higher proportion of households applying from the private rented sector whilst Aberdeenshire has a higher proportion applying from living with family and or friends. Some of this apparent difference may reflect differences in the way tenure are recorded by each authority. The composition of households is also reasonably similar. The main difference is that the Aberdeen HMA has a slightly higher proportion of families and lone parents whilst the Rural HMA has a slightly higher proportion of single person households.

102 However, we would caution that the needs of housing register applicants in their 30s to 50s that occupy separate private housing do not appear to be well documented through the data collected and/or downloaded from the housing register.

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Of the 914 households that are living in the owner occupied sector, 82% are older single person households (34%), older couple (24%) or lone parent households (24%). The remaining 18% of households are virtually all concealed families and single person households over 30 years (many living with parents and other relatives following relationship breakdown). A quarter of households have a tenure classification termed other. The large majority are living in emergency or temporary accommodation, often specialist homeless provision. This category also includes those that have applied from institutions such as hospitals, care homes and prisons. Most of these applicants state their main reason for seeking re-housing is because they either lack a home are homeless or insecurity of tenure.

Figure 6.1: Profile of households in current need by tenure

40 35 30 25 20 15 10 5 0 Owner occupier PRS tenant Friend or relative AHMA RHMA Other

Aberdeen

Aberdeenshire

Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

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Figure 6.2: Households in current need by household type

40 35 30 25 20 15 10 5 0 Single person Older single person Couple Older couple Family Lone Parent Other

Aberdeen

Aberdeenshire

AHMA

RHMA

Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

Single person households and lone parents account for 3 out of 5 households in current need according to Housing Register data. Older households applying from the owner occupied sector or indeed any other tenure indicate that the main reason is either health or care related. Most lone parents irrespective of tenure, indicate that the main reason for seeking to be re-housed is due to relationship breakdown or a change of financial circumstances. Of the 690 families in current need in the Aberdeen City and Shire Area, over 8 out of 10 are renting privately or living with relatives or friends. As expected most families are seeking a separate home of their own and many have points for overcrowding and/or sharing their home with another household.

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Table 6.5: Percent households in need by HMA, tenure and household type
Owner Occupier 2 6 0 4 1 4 0 18 Private Tenant 5 2 2 1 7 4 0 22 With Friend or Relative 13 1 6 0 5 10 0 35 Other 13 1 1 0 2 6 1 25 16 1 1 0 1 4 0 25 Total 34 9 10 5 15 24 2 100 37 10 11 5 13 23 2 100

Aberdeen HMA

Single person Older single person Couple Older couple Family Lone Parent Other Total

Single person 1 3 16 Older single Rural HMA person 6 1 1 Couple 0 2 7 Older couple 4 1 0 Family 1 8 2 Lone Parent 4 7 8 Other 0 0 0 Total 16 23 36 Source: Aberdeen City and Aberdeenshire Housing Register edited dataset

6.30 It is difficult to be definitive, but upwards of 70% of all applicants included in the count of current need lack a separate home of their own. This estimate includes those living with relatives/ friends or other tenure. It also included involuntary shares and concealed households that share their accommodation with another household in one of the main housing tenures. Emerging (or future) need 6.31 We now turn to future need which involves projecting two components: the average annual numbers of newly forming households in need and the average annual numbers of existing households falling into need. Number of newly forming households in need 6.32 The number of new households unable to afford to buy in the market involves:

Estimating the number of newly forming households Estimating the gross annual income levels of new households Estimating the proportions that cannot afford market- priced housing

6.33 The Guidance states that the calculation of newly arising need should be based on the total number of newly forming households as opposed to net household growth. By contrast, GROS net household projections subsume household formation and dissolution as well as in and out migration.

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Gross Household Formation Rates 6.34 Bramley (2006) has published gross household formation rates for a selection of geographical areas, which are summarised in Table 6.6. These GHF rates are for the total household population but ongoing GROS (2009) investigations into GHF rates confirms that most new households are represented by someone aged 15-29 years. As part of their ongoing investigation, GROS have produced experimental GHF rates. These are also summarised in Table 6.6.. Table 6.6: Alternative estimates of gross household formation rate(GHF)
Source Bramley 2004 and 2006 Bramley 22004 and 2006 Bramley 2004 Bramley 2006 Bramley 2006 Bramley 2006 GROS 2009* GROS 2009* Survey of English Housing Survey of English Housing Note: Geography Aberdeen Aberdeenshire England urban Scotland rural Scotland cities/urban LAs Scotland Aberdeen Aberdeenshire Northern cities Rural and suburban areas Date 2005 2005 2004 2005 2005 2005 2006 2006 2003/4 2003/4 Estimate 2.2 - 2.4* 2.0-2.4* 2.18 - 2.49 2.14- 2.28 2.1 - 2.7 2.35 1.9 to 2.2** 1.7 to 1.9** 2.49 1.76 -1.95

* Bramley estimates suggest the GHF rate for the City has been falling in recent years whereas those for Aberdeenshire have been rising. However the reasons for this are not clear, not least because Bramley stresses that GHF rates for the cities are higher than for other types of local authority. ** These are provisional estimates only and the range reflects different assumptions

6.35 Following a review of the figures presented in table 6.5, the Aberdeen HMA GHF rate has been set at 2.2% whilst the Rural HMA rate has been set at 1.94%. To ensure that the local authority and HMA estimates of the annual numbers of new households produce the same output for the Aberdeen City and Shire Area, the GHF for Aberdeen City and Aberdeenshire have been set at 2.3% and just under 1.97% respectively. 6.36 This decision to adopt different rates for the two HMAs was informed by the following:

Across Britain, cities have much higher rates of new households than rural areas. Census findings confirm that there is a long standing trend for younger adults to move to cities from rural areas and suburban areas at the time of first household formation. As the earlier discussion on demographic trends observed, there is a possibility that GROS estimates and projections under-estimate the numbers of 16-24 year olds living in the City.

6.37 Although this latter issue warrants further investigation, we suspect that one reason for the likely under-count is that young adults that move from

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Aberdeenshire to the City to pursue education or employment opportunities do not always change GP. Consequently, these adults do not appear in the health data used to inform local migration estimates and projections. The GHF rates adopted are therefore designed to make some provision for the possibility that there are more adults under 30 years living in the Aberdeen HMA and correspondingly fewer adults under 30 years living in the Rural HMA. 6.38 In addition, it was judged appropriate to adopt reasonably conservative GHF rates for both housing market areas because:

New household formation is influenced by the age structure of the population and, as noted earlier, the population is aging. Over the long term this is likely to reduce the gross household formation rate expressed as a percentage of all households, which is what is being projected. In tight housing markets where there is considerable competition for housing, household formation may be suppressed, although the main effect is to increase the age of first household formation rather than lead to households postponing household formation indefinitely.

Demographic projections 6.39 Consistent with the discussion in chapter 4, the central estimate of net annual housing need has been based on the high-variant strategic household forecast because of the desire to ensure the housing needs estimate is underpinned by the same demographic assumptions that informed the Aberdeen City and Shire Structure Plan that was approved in 2009. 6.39 Table 6.7 summarises the average annual numbers of new households that are projected to emerge once the central GHF rates have been applied to the high-variant strategic household forecasts and the GROS principal household projections. 6.40 The decision to use the higher variant strategic household forecasts in preference to the GROS principal or high variant projections has only a minor impact on the average annual numbers of new households projected at the housing market area level over the period from 2009 to 2018 inclusive. 6.41 There is a somewhat larger effect on the projected annual flow of new households at the local authority level. This is consistent with the assumption embedded in the SP strategic forecasts that the changing population age profile and anticipated policy developments may lead to a the City accommodating a greater share of the overall net household growth in the Aberdeen HMA than witnessed over the past decade103.
103

The relationship between household population growth and expansion of the housing stock at the housing market area as a whole is a circular one because households move from areas where growth is restricted to areas where growth is facilitated.

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Table 6.7: Projected annual average number of new households, 20092018

Household projections Gross household formation rate (GHF) GHF applied to SP highvariant strategic forecast GHF applied to GROS principal 2006 based projections Difference Aberdeen 2.3% 2,469 2,443 26 Aberdeenshire 1.97% 2,105 2,145 -40 Aberdee n HMA 2.2% 3,397 3,418 -21 Rural HMA 1.94% 1,177 1,170 7 Total 2.13% 4,574 4,588 -14

Sources: Strategic household Forecasts, High variant, 2007 and agreed GHF as discussed above Note: Application of the GHF rate to the strategic forecasts results in 14 fewer new households because the Strategic Forecasts project lower numbers of households than the GROS in the period to 2015.

Estimating the gross annual income levels of new households 6.42 Scottish Government suggest affordability tests should be based on gross household income. At present, CACI Paycheck is the only source of data on gross household incomes available at local level. 6.43 It would be preferable to have specific data on the incomes of households represented by someone aged 16-34 years but such data is not available. However, the use of CACI is not considered unduly problematic. 6.44 We compared the Scottish Household Survey net income distribution profile for all households for Aberdeen City and Shire with the income distribution for all households under 35 years. As Figure 6.3 indicates, the two percentile distributions are very similar. 6.45 Bramley (2004) reported that PayCheck figures were comparable with his affordability model income estimates and that both sources produced income distributions that were broadly consistent with outputs from the Family Resources Survey for different types of area. He observed that Paycheck may slightly under-estimate incomes for cities but may produce better estimates for rural area than his own income model. Since 2004 both income models have been further refined.

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Figure 6.3: Distribution of net income for all households and households aged 16-34 years living in the Aberdeen City and Shire area
50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 10 20 30 40 all 50 60 70 80 90

under 35

Source, Scottish household Survey 2005/6 rebased to 20027/8

6.46 CACI PayCheck estimates numbers of households by income band (05,000, 5,000-10,000 etc). For those bandings which straddled the affordability threshold it was assumed that the numbers of households in an income band were evenly distributed across the 5,000. This assumption was then used to assign a proportionate share of households in the threshold income band to below and above the price threshold. 6.47 For example, if CACI estimate some 13,000 households in the Aberdeen HMA have a gross annual income between 30,000 and 35,000 and the entry level threshold is judged to be 32,500 we assume that half of these households (6,500) have an income of less than 32,500 and half an income over 32,500 or more. Entry level priced housing for sale 6.48 Scottish Government guidance suggests the assessment of affordability requires household incomes to be measured against prices for entry-level priced housing. 6.49 As discussed in chapter 3, there has been a stark decline in the affordability of the owner occupied sector since 2005 but there was a modest fall in prices in the second half of 2008. We have therefore adopted the lower quartile resale price for the last quarter of 2008 as representative of the entry level to the market for prospective new buyers. These entry house price thresholds are summarised in table 6.8 below104.
104

Local perceptions and the Registers of Scotland (ROS) on-line quarterly tables indicate that average house prices (and sales volumes) in Aberdeen City and Shire have increased over the past 12 months. However, detailed house price data for 2009 is not yet available. It

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Aberdeen HMA private renting threshold 6.50 The Scottish Government suggest setting the affordability threshold in relation to private rents, if it is evident that the cost of private renting is significantly lower than the cost of house purchase. 6.51 Private renting plays a pivotal role in meeting housing requirements in the Aberdeen HMA. It is considerably more accessible than the owneroccupier and social rented sectors. The sector has absorbed considerable numbers of overseas and rest of UK migrants and continues to house many students and many individuals in oil and gas related employment. 6.52 This does not mean private renting is significantly less expensive than buying an entry-level priced dwelling. As discussed in chapter 3, private rents in the Aberdeen HMA are amongst the most expensive in Scotland. 6.53 Although there has been some fluctuation in rents level at the upper end of the market during 2009, this has not lead to a fall in rents at the middle and lower end of the market. Between late 2008 and January 2010 Local Housing Allowance (LHA) rates have remained unchanged. By contrast, there has been a modest fall in the LHA rates for the Lothians and Greater Glasgow. 6.54 In December 2008, the LHA for a 2-bedroom dwelling in the Aberdeen and Shire Rental Area was 150 per week. By comparison, the weekly payment for a 115,000 mortgage would be 104 for an interest only mortgage and 152 for a repayment mortgage based on a 4.7% interest rate and a 25-year repayment period. If the interest rate is lowered to 4%, these payments would fall to 89 and 142 respectively. 6.55 The guidance suggests that a household should be considered able to afford a rent that costs no more than 25% of its gross income. Using this benchmark, a household renting a 2-bedroom property would require a gross annual income of 31,200. 6.56 This compares to a gross annual income threshold of 32,857 for entrylevel owner occupation at the Aberdeen HMA area as a whole (assuming a household can borrow up to 3.5 their salary) 6.57 Overall, we judge that private renting in the Aberdeen HMA is not significantly cheaper than house purchase. Whilst the impact of applying a private renting threshold affordability test is shown in table 6.8, the central estimate for the Aberdeen HMA and for Aberdeen City has been based solely on the entry-level house prices.

is therefore not yet possible to tell whether the recent upturn in average prices has occurred across all segments of the market- See http://www.ros.gov.uk/public/news/QuarterlyLA

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Rural HMA private renting threshold 6.58 In the Rural HMA, private renting also plays a vital role; especially in more remote areas where private rental lettings provide the only alternative to buying because of the absence of social rented provision. 6.59 In some localities within the Rural HMA private renting is more affordable than buying because:

Rural estates and some other large landlords do not necessarily charge full open-market value rents. House prices in some localities are much higher than those for the Rural HMA as a whole. This is because the latter tend to be influenced strongly by prices in the Banff and Buchan area, which includes Fraserburgh and Banff, and the Buchan area centred on Peterhead.

6.60 A valid affordability test for market rents should consider both rent levels and vacancy rates to ensure that there are adequate numbers of vacancies to accommodate those seeking to rent privately. At present the necessary data to undertake such analysis is not available. 6.61 Turnover and vacancy rates in parts of this sector are believed to be low and a reasonably high proportion of private lets continue to comprise of tied and informal lettings (i.e. renting from family, friends etc) and are therefore not open or accessible to all households seeking private rented provision. 6.62 Local experts believe there is a shortage of rented accommodation, irrespective of whether social or private, in more remote rural areas. At present it is far from certain that private rental vacancy rates across the Rural HMA are sufficient to meet demand from households that are seeking to rent a home within reasonable travel distance of their family and/or friends or place of employment as an alternative to house purchase. 6.63 It would therefore be inappropriate to simply assume there are sufficient vacancies to absorb demand from these more affluent households plus meet the needs of less affluent households that have incomes below the Rural HMA affordability threshold. 6.64 More generally, the Rural HMA is a somewhat artificial artifice. In practice this area is polycentric in character. It is made up of several local markets that typically operate as standalone areas with little interaction between them. 6.65 The housing needs model can therefore only provide a broad-brush indication of the potential magnitude of the overall shortfall (or surplus) of affordable housing supply. This is because the needs model is neither well

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suited nor readily adaptable to reflect the distinctive structure and nature of sparsely populated and highly localised markets105. 6.66 Having regard to the limitations of the housing needs model in a rural setting, it was decided to base the affordability assessment for the central estimate of net annual housing need solely on the numbers of new households unable to purchase an entry level priced dwelling. Affordability tests 6.67 The Scottish Government (2008) indicates that households should be considered able to afford to buy an entry level priced house that costs 3.5 times gross income for single income households or 2.9 times for dual income households. 6.65 In terms of assessing the purchasing power of new households it has been assumed that households with a gross income of at least 32,857 in the Aberdeen HMA and 27,857 in the Rural HMA can access the open market. Thus the affordability test used to prepare the central estimate shows the upper limit of income related affordability and assumes a household can borrow 3.5 times their income and can secure a 100 per cent mortgage. 6.65 Several factors influenced this choice to use a single multiplier of 3.5 and a 100% mortgage:

We modelled the possibility of using 2 multipliers and the results are summarised in table 6.8. These findings are not considered robust because as discussed in appendix 8, the main problem is that there is no robust data on the income distributions of new households broken down by household type and the numbers of earners in a household. Application of a 2.9 multiplier and an assumed deposit of 17% produces comparable results to the application of a 3.5 multiplier and no deposit (see Table 6.8). The private rental threshold for the Aberdeen HMA and the two local authority areas also produces very similar results to the results generated by the application of the single 3.5 multiplier. The national affordability model uses a multiplier of 3.5 (Bramley, 2006) whilst evidence from the Housing Register confirms that most households in current housing need are single income households.

105

It is not possible to produce robust projections of newly arising need or stock flows for small populations. Although we have apportioned local authority level projections to the 2 HMA areas, inevitably apportioned projections become increasing unreliable as the numbers of households and dwellings in the area of interest falls. Moreover, the translation of recent patterns of need, demand, prices and supply into projections suffer from problems associated with small populations. In the case of need for example changes in the circumstances of a few households can easily invalidate housing need estimates.

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Table 6.8: Estimated annual number of new households that cannot afford to access market priced housing, 2009-2018 inclusive
City Annual number new households Percent all households aged 16-29 years that are single person household Percent other households aged 16-29 years Entry level purchase price or private rent Entry house purchase price (Q4 2008) Mortgage required if assume 17% deposit 2,469 49% 51% 110,000 91,300 Shire 2,105 34% 64% 120,000 99,600 Aberdee n HMA 3,397 47% 53% 115,000 95,450 Rural HMA 1,177 34% 64% 97,500 80,925

150 150 150 150 Weekly LHA limit for a 2 bedroom dwelling Weekly cost for a 25 year 100% repayment mortgage 145.61 158.85 152.23 129.06 with an interest charge of 4.7% Weekly cost for a 25 year 100% interest only 99.42 108.46 103.94 88.12 mortgage with an interest rate of 4.7% Monthly cost for a 25 year repayment mortgage with 523.71 571.32 3547.51 464.20 an interest charge of 4.7% and deposit 17% Monthly cost for a 25 year interest only mortgage with 357.59 390.09 373.84 316.95 an interest rate of 4.7% and deposit 17% Gross income required to access open market Gross income: 3.5 multiplier and 100% mortgage 31,429 34,286 32,857 27,857 Gross income: 2.9 multiplier and 100% mortgage 37,931 41,379 39,655 33,621 Gross income: 3.5 multiplier and 17% deposit 26,086 28,457 27,271 23,121 Gross income: 2.9 multiplier and 17% mortgage 31,483 34,345 32,914 27,905 Gross income: rent not to exceed 25% gross income 31,200 31,200 31,200 31,200 Affordability test 1: entry level purchase: 100% mortgage & 3.5 multiplier (central estimate) Number unable to purchase 1,358 1,158 1,834 558 Proportion of new households unable to buy 55% 55.5% 54.3% 47.4% Affordability test 2: entry level purchase: 100% mortgage & 2.9 multiplier Number unable to purchase 1,628 1,139 2,222 691 Proportion of new households unable to buy 65.9% 66.5% 65.4% 58.7% Affordability test 3: entry level purchase: 83% mortgage & 3.5 multiplier Number unable to purchase 1,088 935 1,476 433 Proportion of new households unable to buy 44.1% 44.4% 43.5% 36.8% Affordability test 4: entry level purchase: 83% mortgage and 2.9 multiplier Number unable to purchase 1,360 1,170 1,849 559 Proportion of new households unable to buy 55.1% 55.6% 54.4% 47.5% Affordability test 6: Application of single and dual income multipliers Number unable to purchase: 100% mortgage plus 3.5 1,495 1,320 2,045 645 multiplier for single household and 2.9 to all others % unable to afford 61% 63% 60% 55% Affordability test 7: rent 2 bedroom dwelling Number unable to afford rent of 150 1,358 1,060 1,770 640 % unable to afford 54.6% 50% 51.3% 54.2%
Sources: CACI PayCheck, Sasines, and Scottish Government published LHA allowance December 2009. Note: the difference between the numbers of new households that fall below the central affordability test 1,4 and 7 may be lower than suggested; This is because numbers are heavily influenced by apportionment of households in 30,000 to 35,000 income band for Aberdeen HMA and 2 LAs

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6.67 Following the turmoil in the financial sector, new households have struggled to secure mortgages with high loan to value ratios, although mortgage constraints are beginning to ease106. 6.68 It is important to recognise and develop appropriate policy responses to short-term dynamics in the housing market such as those discussed in chapter 4. However, strategic planning for housing provision requires a longer-term perspective. It was therefore judged simpler and more prudent to use the single income multiplier rather than seek to apply both multipliers. 6.69 There has been a gradual increase in the levels of inter-generational transfers of wealth used to assist new households buy a home. At present, a wealth adjustment factor has not been embedded into the central estimate of newly forming households in affordable need. This reflects the absence of robust evidence at the local level. 6.70 Table 6.8 therefore estimates of the numbers of new households that would be unable to buy if we assumed a new household could make a deposit of 17% for comparison. This figure is the average deposit made by all UK first time buyers in 2007 and the average deposit paid by Scottish first time buyers over the 20 years to 2008 inclusive107. 6.71 Bramley (2006) included a wealth adjustment factor in his estimates of newly arising need. His analysis suggests access to inter-generational wealth transfers or savings improved affordability from anywhere 2% to 10% at the local area level and by almost 6% at the Scotland wide level. Bramley acknowledges the local figures are less robust. Nonetheless, his analysis suggests adopting an assumed deposit of 17% (which tends to improve affordability by some 10%) is at the very upper limit of income plus wealth related affordability that is likely to arise over the long term. Numbers of new households unable to afford market housing 6.72 Using CACI data for 2008, table 6.8 shows the estimated proportion of new households across the Aberdeen City and Shire Area that had a gross income below the 2008 local entry price thresholds. Table 6.8 highlights that in terms of our central test of affordability (test 1):

Of the 3,397 new households expected to form each year in the Aberdeen HMA, some 1,563 will be able to afford market entry housing and the remaining 1,834 will require some form of affordable housing or some other form of financial assistance.

106

During 2008 and 2009 first time buyer deposits fluctuated from 20% to 25% but in the last 3 months there has been an increase in first time buyer mortgage products that require 10% deposits. 107 See Department of Communities and Local Government Live tables ( Table 539 and 515)

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Of the 1,177 new households expected to form each year in the Rural HMA, some 558 would be unable to afford to purchase an entry level priced house. Consistent with our earlier discussion, test 4 (multiplier 2.9 plus 17% deposit) produces very similar results to the central estimate for both housing market areas. For example, the central estimate suggests that 54.3% of new households in the Aberdeen HMA will be unable to buy whereas test 4 suggests this proportion may be 54.4%. In the case of the Aberdeen HMA, the share of new households unable to buy and the proportion possibly unable to rent are within a few percentage points of each other - the difference is just 3%. In the case of the Aberdeen HMA, the share of new households unable to buy and the proportion possibly unable to rent are within a few percentage points of each other - the difference is just 3%.

6.73 As expected, the annual numbers of new households unable to buy when the 2 HMA estimates are summed (2,392) is 124 lower than the combined local authority sum (2,516). In this context it should be noted that: The lower HMA based counts largely reflects the fact that both the Aberdeen HMA and Rural HMA price thresholds are lower than the Aberdeenshire local authority wide price threshold. When we apply the two HMA entry-level thresholds, the annual number of new households in Aberdeenshire unable to secure entry level priced housing declines from 1,158 to 970, a fall of 188. In the case of Aberdeen City, the housing market level affordability threshold is some 5,000 higher at 115,000. Applying the Aberdeen HMA threshold at the City level would increase the annual flow of newly forming households unable to access market from 1,358 to around 1,422 new households, an increase of some 64 per annum.

6.74 When compared to Bramleys (2006) national housing need and affordability model, the findings suggest that income related affordability need amongst newly forming households in the period from 2001 to 2008:

Increased by 14% from 35.5% to 49.5% between 2001 and 2005 and by a further 5.5% to 55% by 2008 in the case of Aberdeen City Increased from 41.4% in 2001 to 55.5% by 2008 in the case of Aberdeenshire, a rise of 14.1%.

6.75 This increase in affordability pressures during the last decade is consistent with housing market trends and in particular the steep rise in house prices in the period from 2004 to 2008.

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6.76 More generally, Table 6.8 and the above discussion highlights that estimates of the annual numbers of new households unable to afford to buy are very sensitive to the price thresholds used. We investigate this matter further later on in this section. Existing households falling into need 6.77 Over time, some existing households may fall into need even though they have suitable accommodation today. For example, a member of a household may develop a medical condition that requires a house move. 6.78 The projected flow of existing households falling into need should ideally be based on the annual average number of applicants from the resident population (including those that are re-housed) that apply for social housing over the previous 3 years. However the necessary data is not available. 6.79 Our projection of the annual flow of existing households falling into need is therefore derived from resident:

Owner-occupiers aged 30+ years or over that applied for re-housing in the 12 months to October 2009 and assessed to be in need. Private renters and lodgers aged 30+ years that applied for re-housing in the 12 months to October 2009 and assessed to be in need.

6.80 The age threshold was selected to seek to minimise double counting with newly forming households108. Care was also taken to exclude concealed households. Based on available evidence it is projected that:

170 households in Aberdeen and a further 150 households in Aberdeenshire may require a move from the owner occupied to the social rented sector each year. In both areas, up to 4 out of 5 such households are households looking to move for health and/or care related reasons. 220 Aberdeen households and 170 Aberdeenshire households may need a move from private to the social rented housing each year.

6.81 Table 6.9 summarises our annual allowance for emerging need amongst existing households broken down by tenure and local area.

108

These flows are consistent with numbers generated by data for the 12 months to January 2009. We would also note that we have not included a separate projection in respect of homeless rates. Most homeless applicants are younger adults and therefore subsumed within the count of newly forming households. The estimate of existing households falling into need is likely to subsume most other households that become homeless.

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Table 6.9: Annual allowance for existing households falling into need
Household projections Aberdeen Aberdeenshire Aberdeen HMA Rural HMA Total 320 390 NA 710 Existing owners aged 30+ 170 150 237 83 years falling into need Existing private renters aged 30+ years falling into 220 170 286 104 need In-migrants in need NA NA NA NA Total 390 320 523 187 Source: Analyses of Housing Register applicants for Aberdeen City and Aberdeenshire

6.82 The projected flows in respect of existing owners are considered conservative. For example the annual allowance for households required to move from the owner occupied to the social rented sector are very much lower than the equivalent allowance identified by Bramley (2006). 6.83 One possible reason for this is that some older homeowners seeking very sheltered or highly supported housing may be more likely than other applicants to apply direct to RSLs rather than the Council. Set against this however, the Bramley figures are derived from inter-tenure moves using SHCS data for 2002 and are somewhat dated. In the intervening period the expansion of care and repair and other services is likely to have assisted older homeowners remain in their own home. 6.84 Although the number of older owners will increase over the next 10 years and beyond, it has been assumed that the numbers looking to move to social rented housing will remain constant109. 6.85 The allowance for private renters falling into need is sensitive to the age threshold used. It is also sensitive to assumptions made regarding whether to include or exclude those that state their main reason for applying was relationship breakdown (again to reduce potential overlap with the count of new households). 6.86 The Joint Study Team therefore plan to use the SHS 2007-8 findings to examine inter-tenure flows amongst households represented by someone aged 30+ years to seek to verify both estimates. This dataset is due to be released later in 2010. 6.87 Migrant households are another possible source of emerging need and demand. In terms of the total housing requirement, the upturn in netmigration, which is reflected in population and household projections, is the critical consideration. From a housing needs perspective however, an additional consideration is whether the socio-economic profile of in-migrant households differs from that of out-migrants.

109

In effect this means that although the number will remain constant, the proportion of all older owneroccupiers looking to move to social housing is assumed to decline over time

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6.88 Historically, migrant households have generally looked to the private sector to meet their housing requirements. Since 2004/5, migrant workers from the new EU member states have added slightly to the demand for social housing. However, there is much uncertainty regarding future migration rates. There is also no robust secondary data to support analysis and comparison of the socio-economic profile of in-migrant and out-migrant households. 6.89 Bramley (2006) used an occupational mix based approach to estimate migrant need. As details of this approach are not provided, it is not possible to appraise the robustness of the following figures, which suggest in 2005:

The Aberdeen HMA has a migrant need: -55 The Rural HMA has a migrant need: 45 Aberdeen City has a migrant need: -10 Aberdeenshire has a migrant need: 95

6.90 These numbers do not seem to accord with evidence on migration flows presented elsewhere in this report. This suggests the Bramley estimates may now be out of date and do not reflect the upturn in overseas migrants in recent years. 6.91 On balance, and allowing for the fact that there is no obvious alternative to the Bramely estimates, it was decided that no projection of the annual flow of migrant need should be built into the calculation of emerging need. Summary of emerging need 6.92 Table 6.10 draws together the various components to provide a summary of the annual emerging (or future) need estimates by housing market area. It indicates that across Aberdeen City and Shire, some 3,102 newly forming households or existing households are likely to fall into need each year. This equates to less than 1.5% of the current household population. Table 6.10: Consolidated central estimate of emerging need
Household projections Proportion of new households unable to buy (multiplier of 3.5) based on local area price threshold Existing owners aged 30+ years falling into need Existing private renters aged 30+ years falling into need Total Aberdeen Aberdeenshire Aberdeen HMA 1,834 237 286 2,357 Rural HMA 558 83 104 745

1,358 170 220 1,748

1,158 150 170 1,478

6.93 As expected, over 3 out of 4 households that are projected to be in future need are likely to be seeking housing in the Aberdeen HMA. Building on the discussion set out in paragraph 6.73, if the local authority estimates are re-based to reflect the housing market area (as opposed to the local authority wide) affordability threshold:

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Emerging need in Aberdeen City would increase from 1,748 to 1,812 Emerging need in Aberdeenshire would reduce to 1,478 to 1,290

Projecting housing supply Social rented stock estimates

6.94 To assess prospective supply to address backlog and future need we projected changes in the total social rented stock and thereafter projected relets. For both local authority and RSL stock we:

Assumed that 2009 was the base year Projected annual demolitions and Right to Buy (RTB) sales Projected committed new build and conversion completions

6.95 Table 6.11 summarises our social rented new build assumption, which are intended to reflect when a dwellings is likely to be first occupied110. Our central estimate is essentially a policy off option. These new build projections only includes committed supply which we have interpreted as RSL and local authority dwellings that are currently under construction or have secured a Scottish Government funding contribution. This should permit policy makers to assess whether there is likely to be a requirement for further new affordable housing provision to address housing need over the longer term. Table 6.11: Programmed social rented new social rented build programme
Area Aberdeen 2009 RSL 60 LA 0 Aberdeenshire RSL 0 130 LA 0 20 Total All 60 398 Source: Figures provided by both Local Authorities calendar year 2010 2011 215 119 33 85 150 27 381 2012 0 35 112 34 181 Total 394 153 392 81 1,020

6.96 RTB rates have been declining in recent years, no doubt in response to increasing affordability pressures and the impact of the modernised RTB. The rate of decline in Aberdeen City and Shire has reduced even more sharply following the designation of Pressured Area Status in many local areas. 6.97 Future local authority RTB sales are therefore projected to remain very low at 0.55% for the City and 0.5% for Aberdeenshire. A minimal allowance (8 per annum) has also been made for RTB sales in the RSL sector, mainly former Scottish Homes stock. Proposed new legislation aims to limit further
110 In addition a number of intermediate houses units being funded or secured through other arrangements. These are discussed below.

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the RTB scheme, but again this has not been allowed for, as the central projection is a policy off option. 6.98 The stock projections do not include provision for demolitions from 2010 onwards. In terms of the Haudagain roundabout bypass scheme, Aberdeen Councils decision to stop reletting 276 properties in this area from 2010 has been allowed for by increasing the rate of dwellings not available for permanent occupation to 2015. 6.99 Table 6.12 shows the projected year on year change in the social rented sector in the period to 2018 at housing market area level whilst Table 6.13 summarises comparable figures for the local authority area. Table 6.12: HMA level social rented stock projections 2009-18
Aberdeen HMA stock at end of year Completions Rural HMA stock at end of year 11,513 11,567 11,631 11,697 11,651 11,606 11,561 11,515 11,471 11,426 Completions 0 100 110 112 0 0 0 0 0 0 332

Demolitions

Stock at year start

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total additions or deletions

32,235 32,110 32,256 32,376 32,294 32,143 31,993 31,844 31,685 31,526

152 152 152 151 151 150 149 160 159 158 1,532

33 0 0 0 0 0 0 0 0 0 33

60 298 271 69 0 0 0 0 0 0 698

32,110 32,256 32,376 32,294 32,143 31,993 31,844 31,685 31,526 31,368

11,560 11,513 11,567 11,631 11,697 11,651 11,606 11,561 11,515 11,471

Stock at year start

Year

47 46 46 46 46 46 45 45 45 45 46

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Demolitions 0 0 0 0 0 0 0 0 0 0 0

RTB sales

RTB sales

Table 6.13: Local authority level social rented stock projections 2009-18
Aberdeen LA stock at end of year Completions Demolitions RTB sales Stock at year start Stock at year start Year Aberdeenshire LA stock at end of year 16,773 16,857 16,968 17,047 16,981 16,916 16,850 16,785 16,720 16,656 Completions 0 150 177 146 0 0 0 0 0 Demolitions 0 0 0 0 0 0 0 0 0 0 RTB sales 67 66 66 66 66 66 65 65 65

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

26,955 26,850 26,967 27,040 26,944 26,813 26,684 26,554 26,415

132 131 131 131 130 130 129 139 139

33 0 0 0 0 0 0 0 0

60 248 204 35 0 0 0 0 0

26,850 26,967 27,040 26,944 26,813 26,684 26,554 26,415 26,276

16,840 16,773 16,857 16,968 17,047 16,981 16,916 16,850 16,785

26,276 138 0 0 26,138 16,720 64 0 Total additions 1,331 33 547 66 0 473 or deletions Notes: Figures in tables 12a and 12b may not always add up exactly due to rounding

Annual flow of social rented lettings 6.100 In terms of estimating net annual housing need the critical consideration is the projected annual flow of social lettings that are available for permanent occupation net of transfer lettings. This includes net relets of existing social rented properties plus first lets of new social rented provision. Stock not available for permanent letting 6.101 Most social landlords own properties that are not available for permanent occupation. Some are held vacant to facilitate decanting or are used to provide temporary homeless accommodation whilst others are empty pending improvement, demolition or disposal. 6.102 At the start of 2009 Aberdeen Council owned 22,960 properties, of which just under 3% were unavailable for permanent let. This included 197 properties used as temporary homeless accommodation and some 100 properties awaiting or undergoing major structural works. This figure also includes properties used for decant tenants as well as warden provision. This proportion is expected to increase to 4.7% because of the planned growth in the numbers of properties to be used to provide temporary homeless accommodation and the plan to stop reletting 276 properties in Haudagain area. However, this proportion is expected to fall back below 4% after 2015 as the numbers of dwellings undergoing major structural works tails off. 6.103 Aberdeenshire Council had over 22,960 dwellings at the start of 2009/10, of which almost 2% were used for temporary homeless

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accommodation or are otherwise not available for permanent occupation. Looking ahead, we have assumed that the proportion of stock unavailable for permanent occupation will remain unchanged. 6.104 At the start of 2009 there were 5,595 RSL selfcontained rented units in the Aberdeen HMA and 2,300 units in the Rural HMA. This figure excludes a small number of highly specialised accommodation units such as those managed by the Abbeyfield Society and Ark HA. At local authority and housing market area level we have assumed only 0.1% of the RSL rented stock is not available for permanent let. This figure reflects the numbers of low demand units that have been void for over 6 months. 6.105 In all instances, the projected rate of stock not available for permanent occupation has been netted off from the annual starting stock prior to projecting forwards the annual flow of lettings. Operational voids and gross relet rates 6.106 As in the private sector, at any single point in time a small proportion of the effective stock of social rented will be vacant following tenancy termination. Such vacancies tend to be referred to as to transitional voids or operational voids. Available evidence suggests that in both the local authority and RSL sector no more than 1% of the stock is likely to be vacant at any single point in time. In terms of future projections we have assumed that this figure will remain constant. 6.107 As discussed in the chapter 3, there has been a marked fall in the annual flow of council relets. After netting of operational voids, the average annual flow of relets over the previous 3 years has equated to a council sector relet rate of 8.6% for Aberdeen City and 7.7% for Aberdeenshire. Although the relets rate may continue to fall for some time until the housing market recovers, we have based the central estimate of these two figures. 6.108 According to Housing Regulator and SCORE statistics, the local RSL relet rate over the past 3 years has been around 9.5%, although this rate has been marginally higher in the Rural HMA. 6.109 Table 6.14 to 6.17 summarises the projected annual flow of social lettings inclusive and exclusive of internal transfers. Around 20% to 25% of lettings involve transfers to existing social renters, although the proportion varies between landlords and between the two local authority areas.

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Table 6.14: Projected social housing supply in Aberdeen to 2018

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ave to 2018 Council lettings non all transfer 1,896 1,517 1,870 1,496 1,856 1,485 1,843 1,475 1,831 1,821 1,812 1,804 1,799 1,788 1,832 1,465 1,457 1,450 1,443 1,439 1,431 1,465 RSL lettings non all transfer 377 302 382 306 402 322 413 330 401 411 411 410 410 409 403 321 329 329 328 328 327 322 First Lets 60 248 204 35 0 0 0 0 0 0 55 Net lettings for new tenants 1,878 2,050 2,011 1,840 1,786 1,786 1,778 1,771 1,767 1,758 1,842

Note: figures in tables 6.13 to 6.16 may not always add up precisely due to rounding

Table 6.15: Projected social housing supply in Aberdeenshire to 2018

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ave to 2018 Council lettings non all transfer 970 766 965 762 961 759 958 757 956 951 946 942 937 932 952 755 751 748 744 740 737 753 RSL lettings non all transfer 365 273 364 273 376 282 390 293 401 400 400 400 400 400 390 300 300 300 300 300 300 292 First Lets 0 150 177 146 0 0 0 0 0 0 47 Net lettings for new tenants 1,039 1,185 1,219 1,196 1,056 1,052 1,048 1,044 1,040 1,036 1,092

Table 6.16: Projected social housing supply in Aberdeen HMA to 2018

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ave to 2018 Council lettings non all transfer 2,146 1,715 2,133 1,704 2,119 1,693 2,106 1,682 2,092 1,672 2,084 1,665 2,070 1,654 2,061 1,646 2,056 1,642 2,043 1,631 2,091 1,670 RSL lettings non all transfer 523 415 528 417 552 431 568 443 564 440 569 444 568 443 567 443 567 442 566 441 557 436 First Lets 60 298 271 69 0 0 0 0 0 0 70 Net lettings for new tenants 2,189 2,419 2,395 2,194 2,111 2,109 2,097 2,089 2,084 2,072 2,176

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Table 6.17: Projected social housing supply in Rural HMA to 2018

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ave to 2018 Council lettings non all transfer 719 568 702 555 698 552 696 550 694 691 687 684 681 677 693 548 546 543 540 538 535 547 RSL lettings non all transfer 220 163 221 168 226 172 234 178 241 242 242 242 242 242 273 184 184 184 184 184 184 179 First Lets 0 100 110 112 0 0 0 0 0 0 32 Net lettings for new tenants 731 822 833 841 732 730 727 725 722 719 758

6.110 These projections are based on netting of the non-effective stock rates, from the stock projections reported in table 6.12a and 6.12b and thereafter applying the operational void rates and new build rates discussed above. The four tables suggest that at the Aberdeen City and shire level, the annual flow of social lets could reduce from the annual flow of social lets could reduce from around 2,920 in 2009 to 2,791 by 2018 Central estimate of net annual housing need 6.111 The estimate of net annual housing need that is, need that cannot be met from existing and programmed supply is calculated by comparing the total number of households in need against available supply coming forward each year. Table 6.18 therefore brings together the various calculations to summarise our central estimate of net annual housing need to 2018. It is calculated by adding the annual backlog quota to newly arising need and subtracting the annual net supply. This central estimate is trends based and assumes that backlog need will be addressed over a 10-year period. Table 6.18: Estimate of net annual need 2009 to 2018111
Aberdeen Backlog Emerging need Total need Ave lettings Annual shortfall 256 1,748 2004 1,842 162 Shire 283 1,478 1,760 1,092 668 Aberdee n HMA 376 2,357 2,733 2,176 557 Rural HMA 163 745 908 758 150 All (HMA based) 539 3,102 3,641 2,934 707 Derivation table 6.4 table 6.10 NA table 6.13-6.16 NA

Note: figures may not always add up precisely due to rounding

6.112 Table 6.18 shows that for the Aberdeen HMA there is a net annual need of 557. It also shows that annual emerging need is projected to exceed the likely annual flow of lettings. This suggests the housing need is chronic is

111

A full summary table of inputs to the needs model can be found in appendix 8.b

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the Aberdeen HMA and that the backlog is unlikely to reduce without additional supply. 6.113 In the Rural HMA, there is a net annual need of 150. In principle, projected lettings are at a level that should allow some inroad to be made in terms of reducing the backlog. In practice however, there may be a substantial mismatch between the location of need and the location of social rented vacancies across the Rural HMA which the model has not allowed for. 6.114 It should also be borne in mind that the housing needs model does not make any allowance for mismatches between the type and size of housing required by those in backlog or emerging need and the type and size of properties that fall vacant. 6.115 The Aberdeen City and Shire wide estimate of net annual housing need of 707 is based on summing the findings for the two housing market areas. This is the preferred measure and is consistent with the Scottish Government guidance. This figure is lower than the combined local authority area estimates. As discussed in paragraphs 6.73 and 6.93, this is because the HMA affordability thresholds produce a lower count of the numbers of new households in need than the local authority affordability thresholds. 6.116 If the local authority based affordability threshold is replaced by the appropriate HMA affordability threshold, net annual housing need in: Aberdeen City would increase from 162 to 226 Aberdeenshire would fall from 669 to 481, of which 331 would be in the Aberdeen HMA and 150 would be in the Rural HMA

6.117 In other words, the Aberdeen HMA has a net annual housing need of 557, of which perhaps 226 households may live in the City and a further 331 may live elsewhere in the Aberdeen HMA. In practice, households on the margins of being able to buy are likely to be more mobile and have a wider search area than households with few financial resources. Allowing for intermediate housing currently under construction 6.118 The above figures do not take account of intermediate housing units currently under construction. At the time of writing, 66 shared equity or other intermediate units are being developed in the Aberdeen HMA and 62 units are being developed in the Rural HMA. Assuming these dwellings are occupied by households in need over the period, this would reduce the estimate of net annual housing need:

112

For the Aberdeen HMA from 557 to 550 For the Rural HMA from 157 to 144 For the Aberdeen City and Shire area from 707 to 694112

Thus, 7070 (707*10) minus 130 intermediate equals 6940, which divided by 10 equals 694. It should also be noted that the intermediate housing developments under construction are all in Aberdeenshire. We have no information of similar developments within the City.

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Comparison with Bramley needs estimates 6.119 Table 6.19 compares the two local authority based estimates of net annual housing need with those from the national affordability study (Bramley et al 2004 and 2006).Our estimate differs from that Bramley 2005 based estimate but there are some possible reasons for this. 6.120 The Housing Register produces much lower estimates of backlog need. This may be because the national model does not apply all the discounts set out in the guidance (Bramley 2006, p 59). In addition, as noted earlier, households in the private sector that experience some form of housing stress do not necessarily apply for social housing. This may be because they do not believe they would warrant priority or do not see social renting as a potential solution they wish to pursue. Table 6.19: Alternative net annual housing need estimates
Study Backlog New Need + net inmigration need Existing households that fall into need Supply Shortfall City Shire City Shire City Shire City Shire City Shire Bramley 2003 based 680 490 930 860 345 265 -2,695 -1,455 -740 160 Bramley 2005 based 1,015 570 1,020 875 355 280 -2,330 -1,625 60 100 Present study 256 283 1,358 1,158 390 320 - 1,842 - 1,092 162 668

6.121 The alterative estimates of existing households falling into need are not comparable. Our estimate allows for existing owners and private renters to fall into need whereas Bramley only takes account of owners that fall into need. In spite of this, numbers for both authorities are reasonably similar. 6.122 In terms of the annual flow of newly forming housing in need, the Bramley 2005 based estimate includes a wealth adjustment factor. If we assume that households can afford up to 3.5 times their income plus a 17% deposit, the numbers of new households falling into need would fall to 1,088 for Aberdeen and 935 for Aberdeenshire (see affordability test 3 set out in table 6.8). However, both figures remain higher than the 2005-based Bramely estimates notwithstanding the fact that our assumed wealth adjustment factor is much greater than the adjustment Bramley applied, particularly in regard to Aberdeen. 6.123 Looking across Scotland, Bramelys successive studies confirm that increasing prices relative to earnings has been a major factor for the increase in the numbers of new households in need. Our own analysis suggests that if house prices were to fall back to 2005 prices, the share of new households in

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need for Aberdeen City and Aberdeenshire would be similar to those reported by Bramley in 2005. We therefore believe that our central estimate of the numbers of new households in need are credible and are not over-inflated. 6.124 The other reason for the increase in net annual housing need has been the sharp fall in the numbers of vacancies within the social rented sector, especially in the last 5 years. As our relet numbers are based on detailed local data, we are satisfied that they are the more robust. Potential requirement for intermediate housing

6.125 Intermediate housing refers to dwellings which have prices and/or rents that are higher than those for the social rented sector but lower than the prevailing market rate. The potential numbers of households that would benefit from intermediate housing are sensitive to house prices relative to incomes and thus to the ebbs and flows of the housing market cycle. 6.126 Research confirms most buyers of intermediate housing are under 35 years and typically lived with family or friends or rented privately immediately prior to purchase. Most purchasers also bought within their current residential area. This supports our assumption that potential demand for intermediate housing will come predominately from newly forming households113. 6.127 The following estimates of the numbers of households in need that might have sufficient income to purchase a LIFT equity share product are therefore based on newly forming households. Our estimate also assumes that:

The new build price for a typical LIFT product is 130,000 and that prospective purchasers would generally be looking to purchase a 60%, 70% or 80% equity stake in a new build property. A newly forming household can afford to purchase a LIFT product up to 3.5 times their gross annual household income.

113

See for example Bramley, et al (2007) and Wallace (2008)

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Table 6.20: Estimate of new households in need that could afford LIFT option
City Shire Aberdee n HMA 3,397 Rural HMA 1,177

2,469 2,105 Annual number new households Purchase price Entry house purchase price(Q4 2008) 110,000 120,000 115,000 97,500 LIFT option 1: 60% equity share 78,000 78,000 78,000 78,000 LIFT option 2: 70% equity share 91,000 91,000 91,000 91,000 LIFT option 3: 80% equity share 104,000 104,000 104,000 104,000 Intermediate rent option: discounted LHA 450pcm 450pcm 450pcm 450pcm Gross income required (3.5 multiplier and 100% mortgage) Entry house purchase price(Q4 2008) 31,429 34,286 32,857 27,857 LIFT option 1: 60% equity share 22,286 22,286 22,286 22,286 LIFT option 2: 70% equity share 26,000 26,000 26,000 26,000 LIFT option 3: 80% equity share 29,714 29,714 29,714 29,714 Intermediate rent option 21,600 21,600 21,600 21,600 Benchmark: entry level purchase: 100% mortgage & 3.5 multiplier (central estimate) Proportion of new households unable to buy 55% 55.5% 54.3% 47.4% Numbers new households unable to buy 1,358 1,158 1,834 558 Affordability test 1: 60% equity share: 100% mortgage & 3.5 multiplier) Proportion of all new households unable to buy 35.3% 31.2% 32.6% 34.8% Annual average number of new households in 485 500 727 148 need able to purchase LIFT option Annual average number of new households in 873 658 1,107 410 need NOT able to purchase LIFT option Affordability test 2: 70% equity share: 100% mortgage & 3.5 multiplier Proportion of all new households unable to buy 43.9% 39.3% 40.8% 43.4% Annual average number of new households in 274 330 448 47 need able to purchase LIFT option Annual average number of new households in 1,084 828 1,386 511 need NOT able to purchase LIFT option Affordability test 3: 80% equity share: 100% mortgage & 3.5 multiplier Proportion of all new households unable to buy 51.8% 47.0% 48.5% 51.4% Annual average number of new households in 79 168 186 -47 need able to purchase LIFT option Annual average number of new households in 1,279 990 1,649 605 need NOT able to purchase LIFT option Affordability test 4: Mid-market rent of 450 per calendar month for 1 or 2 bedroom dwelling Proportion of all new households unable to rent 33.7% 29.7% 31.1% 33.2% Annual average number of new households in 526 533 778 167 need able to afford intermediate rent Annual average number of new households in 832 625 1,056 391 need NOT able to afford intermediate rent Note: numbers do not always add up precisely de to rounding

6.128 Table 6.20 summarises the proportion of all new households estimated to have insufficient income to purchase each LIFT option (tests 1 to 3). It also

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provides an indication of the annual numbers of new households in need that could and could not afford each LIFT option. 6.129 There is much potential for LIFT in the Aberdeen HMA and to a lesser extent the Rural HMA under current housing market conditions. In particular: Up to 875 new households in need each year could perhaps afford an equity share of 60%, of which 495 could afford an 70% equity share and 186 could afford an 80% equity share. The potential for some form of LIFT product is greatest in the Aberdeen HMA, no doubt because this area has a much higher entrylevel price and a much larger household population base. A 60% equity stake would require a gross income of just over 22,000. For comparative purposes, it is useful to note that the minimum wage for adults over 22 years is 5.80 per hour. This implies a household with two adults earning the minimum wage and working 40 hours a week would have an annual income of over 24,000. The table suggests a LIFT equity share of 80% would not assist new households in the Rural HMA but this may not necessarily be the case. In localities where there are very few opportunities to rent and where local prices are in excess of the Rural HMA entry-level price, there may be much interest in LIFT products.

6.130 Another potential option would be intermediate or mid-market rent. This option typically involves a rent charge which can be 20% lower than the rent for a similar home from a private landlord. We therefore assessed the numbers of newly forming households that could afford a rent of 450 per calendar month. This rent figure is 15% lower than the March 2010 LHA for a 1 bedroom dwelling but 35% lower than the LHA for a 2 bedroom dwelling. As Table 6.19shows, very similar proportions of new households are likely to be in a financial position to rent intermediate housing as would be in a position to purchase a 60% equity share. However the lack of a requirement for a substantial deposit may appeal to some new households that do not want to buy in the very near future. 6.131 In addition to assessing whether new households are in a financial position to access intermediate housing, any policy decisions regarding future expansion of the supply of intermediate housing would need to consider whether these options are likely to be attractive to consumers. 6.132 It would also important to note that over 3 out of 10 newly forming households are unlikely to be in a position to afford intermediate housing of any kind. This group of households is likely to include single person, lone parent and other households reliant on the earnings of one adult in more modest paid employment. It is also likely to include households that qualify for full or partial housing benefit and/or at risk of homelessness. If the number of

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lettings were to continue to decline at the same rate as witnessed in the past 3 to 5 years, this group may find it increasingly difficult to obtain a tenancy. Sensitivity analysis and the possible range of needs estimates 6.133 In common with any set of projections and forecasts, the central estimate of net annual housing need is based on assumptions about what will happen in the future. As the future is inherently uncertain, we examined what could happen if things turned out to be different with respect to one or more of the assumptions built in to our central estimate. Sensitivity analysis 6.134 The following paragraphs examine the potential impact of:

An increase net household growth based on the high variant in GRO household projections plus adjustment to the central gross household formation rates (GHF rates). Changes in the path of future house prices and thus affordability levels Changes in the annual supply of social renting vacancies

6.135 The aim of this analysis was to assess how sensitive our central estimate of net annual housing need for the Aberdeen HMA and the Rural HMA is to a change in one or more of these core assumptions. High variant GRO household projections and alternative GHF rates 6.136 A higher rate of net household growth would increase the number of newly forming households and thus the numbers likely to fall into need. GROS 2008-based high variant projections suggest that there could be 3,400 more households in the Aberdeen HMA by 2018 and 1,300 more households in the Rural HMA. Applying the central GHF rates to these GRO projections would increase the numbers of newly forming households in need to 3,454 in the Aberdeen HMA and to 1,184 in the Rural HMA. 6.137 The net effect of this would be to increase the estimate of net annual housing need from 557 to 588 in the Aberdeen HMA and from 150 to 157 in the Rural HMA. This illustrates that net household growth has some impact on the numbers of new households that form and thus the numbers falling into need. However, the impact is limited. 6.138 What in fact has a bigger impact is the assumed GHF rate. The central estimate for the Aberdeen HMA assumes a GHF of 2.2% whilst the Rural HMA rate assumes a GHF rate of 1.94%. We explored what would happen if these rates were adjusted upwards or downward by 0.2% 6.139 Adopting a 2% GHF rate for the Aberdeen HMA would reduce the numbers of newly forming households from 3,397 to 3,088. If all other inputs were held constant, net annual need would fall from 557 to 390. By contrast,

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increasing the GHF rate to 2.4% would increase the flow of newly forming households to over 3,700 and increase the estimate of net annual need to 724. 6.140 A decrease in the GHF rate for the Rural HMA to 1.74% would reduce net annual need from 150 to 92. An increase in the GHF rate to 2.14% would increase net annual housing need to around 207. 6.141 Large changes in GHF rates are typically associated with major long lasting changes in housing cost to income ratios and substantial increases in housing supply. Long terms prospects for the economy do not suggest that a major upturn or downturn in the rates of household formation or a major change in the relationship between house prices and incomes are probable. Alternative house price options 6.142 Holding all other assumptions constant, we calculate that:

A 10% increase in house prices, would increase the proportion of new households unable to buy to 60% in the Aberdeen HMA and to 53% in the Rural HMA. This would increase net annual housing need for the Aberdeen HMA and Rural HMA to 763 and 222 respectively. A 10% decrease in house prices, would lower the proportion of new households unable to buy to just over 48% in the Aberdeen HMA and to 41.4% in the Rural HMA. This would reduce net annual housing for the Aberdeen HMA and Rural HMA to 363 and 82 respectively. A 20% increase in house prices would increase the proportion of new households unable to buy to 65% in the Aberdeen HMA and to 58% in the Rural HMA. This would increase net annual housing need for the Aberdeen HMA and Rural HMA to 935 and 280 respectively. A 20% decrease in house prices, would lower the proportion of new households unable to buy to 42% in the Aberdeen HMA and to 35% in the Rural HMA. This would reduce net annual housing for the Aberdeen HMA to 150. In the Rural HMA, there would be little, if any, shortfall of affordable supply at the aggregate level, but a different picture might emerge once local variations in prices and incomes were allowed for.

Supply of social renting vacancies 6.143 A substantial increase in lettings rates is judged very unlikely. It would require a large numbers of existing tenants to move out of the sector and into private sector housing each year. Housing market and economic conditions make this seem unlikely for the foreseeable future. We therefore looked at what might happen if the relet rates in the social rented sector slowly increased from 2013 to 2018. We estimate this would reduce net need:

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From 557 to 536 for the Aberdeen HMA From 150 to 158 for the Rural HMA

6.144 We also looked at what might happen if relet rates continued to fall slowly, which is a possibility if trends over the last 5 years were to continue. This shift would increase net need:

From 557 to 580 for the Aberdeen HMA From 150 to 142 for the Rural HMA

Possible range of need 6.145 To avoid the danger of relying on single point projections, we used alternative price assumptions (plus or minus 10%) and relet assumptions to produce a small range on estimates, which are summarised in Table 6.21. 6.146 Both the HMA and local authority based range of estimates outlined in Table 6.21 are based on the appropriate housing market area affordability threshold. The local authority and HMA numbers therefore sum to the same total for Aberdeen City and Shire area as a whole. 6.147 As substantive changes in household formation rates are felt unlikely, these sensitivity tests were not built into the upper and lower estimates. The numbers of households in backlog need and existing household falling into need also remain unchanged. Table 6.21: Alternative estimates of net annual housing need
Aberdeen Shire Aberdeen HMA 376 1,835 523 2,733 2,176 557 376 2,040 523 2,939 2,154 785 376 1,640 523 2,539 2,198 341 Rural HMA 163 558 187 908 758 150 163 630 187 980 750 230 163 490 187 840 766 74 All (HMA based) 539 2,393 710 3,641 2,934 707 539 2,670 710 3,919 2,905 1,014 539 2,130 710 3,379 2,963 416

central estimate

upper estimate

lower estimate

Backlog new forming hoho in need other emerging need Total need Ave lettings Annual shortfall Backlog new forming hoho in need other emerging need Total need Ave lettings Annual shortfall Backlog new forming hoho in need other emerging need Total need Ave lettings Annual shortfall

256 1,422 390 2,068 1,842 226 256 1,570 390 2,216 1,824 392 256 1,265 390 1,911 1,860 51

283 971 320 1,573 1,092 481 283 1,100 320 1,703 1,081 622 283 865 320 1,468 1,103 365

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6.148 The alternative projections all suggest that: If affordability improves and relets begin to increase, as envisaged under the lower estimate, the number of lettings in the Rural HMA would be sufficient to address emerging need and make inroads to reducing backlog need. Aberdeen City would experience a similar trend. . The lower estimate scenario for the Aberdeen HMA suggests that the annual supply of lettings would exceed emerging need, but only by a relatively small number (35). Moreover, the projected increase in lettings would largely be confined to Aberdeen City. Thus the increase in lettings elsewhere in the Aberdeen HMA would remain insufficient to meet the reduced annual flow of emerging need. This suggests that need is particularly chronic in this part of the Aberdeen HMA. If market conditions were to further tighten (as the upper estimate suggests), there would be insufficient lettings to address emerging need let alone reduce backlog need throughout Aberdeen City and Shire. In the Aberdeen HMA for example, the numbers of households in emerging need would exceed the numbers of lettings by over 400. If this scenario was to arise, backlog need could not be addressed unless additional affordable housing supply was secured.

6.149 More generally, the results illustrate that whether or not the high levels of net annual housing need in Aberdeen HMA and the Rural HMA will be sustained into the longer term will depend on how the housing market develops over the next few years. This reinforces the importance of regularly monitoring housing market developments. Summary and emerging issues 6.150 The housing needs analysis demonstrates a clear shortfall in the supply of affordable housing and a growth in the level of net housing need in both housing market areas. 6.151 This has arisen from a range of factors. The first is a decline in the supply of affordable lettings which has constrained the ability of social landlords to address housing need. The second has been substantial and sustained increases in the costs of house purchase relative to earnings at the lower end of the earnings distribution curve. Consequently, increasing numbers of younger households in low to modest employment have found it increasingly difficult to access the market in recent years. It seems probable that some of this price pressure has resulted from a shortage of market housing relative to demand. 6.152 This severity of the situation is such that annual emerging need (i.e. newly forming households in need and existing households falling into need) at the Aberdeen HMA level exceeds supply. Unless this is addressed, it is probable that the backlog will increase in the years ahead.

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6.153 The estimate of net annual housing need is not the same as the numbers of new affordable housing units that should be sought. Members of the Strategic Housing Market Partnership will therefore need to consider which combination of policy tools might be best suited to addressing the requirements of those in housing need. This is likely to be particularly the case for the Aberdeen HMA and parts of the Rural HMA where the findings suggest a level of need that exceeds any credible or possible response through new affordable housing development given current and anticipated public funding constraints. 6.154 Members of the Strategic Housing Market Partnership will also need to think carefully about the volume and type of new affordable housing provision that should be sought in different localities and whether greater weight should be given to competing priorities such as: Addressing need where it is most acute - in terms of location and/or dwelling of a particular size and type that are in scarcest supply Looking to maximise the numbers of affordable units by placing greater emphasis on intermediate housing

6.155 Another issue that warrant policy discussion is the extent to which households could perhaps be encouraged or assisted to move to other parts of the housing market where pressure is less severe. Such policy discussions would do well to look beyond technical assessments of the numbers of households in housing need and take cognisance of the quality of the residential offer in terms of the quality of schools and other factors that are know to shape the locational choices of households.

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7.

Joining Up Across the Assessment

7.1 This chapter draws on the evidence presented in earlier chapters and discussions with the Strategic Housing Market Partnership to explore a number of strategic issues and thus address the final two core outputs set out in the Scottish Government guidance. The Core Outputs that are addressed in this Chapter are: an estimate of future households requiring market housing an estimate of future households requiring either affordable or market housing

How does anticipated population and household growth compare with the partnerships views on economic and population growth? 7.2 The Aberdeen City and Shire economy performed strongly in the decade to 2008. In the 5 years to 2008 economic growth has contributed to a 3.5 % increase in the population and a 6.7% increase in households. 7.3 Global market conditions have created uncertainty about future economic growth and future housing market prospects. Tight lending criteria and a fall in market confidence have contributed to a decline in effective demand for house purchase. The retrenchment in sales activity and constrained access to funding has also forced house builders to re-profile build-out rates and reduce staffing and other costs. 7.4 On the other hand, Aberdeen City and Shires economy has remained more buoyant than elsewhere in the UK. Recent rising oil prices have renewed business confidence in the oil and gas industry which is the main driver of the local economy. Long-range forecasts suggest that labour market participation rates will remain comfortably above the national average in the coming decade. Following a dip in house prices during 2008, there has been a modest rise in house prices in recent months and private rents have started to rise after a period of some fluctuation. 7.5 On balance, the Strategic Housing Market Partnership believe that over the long term the local economy will continue to perform well in comparison to other areas of the UK. More specifically, long-term job growth and productivity improvements along with the continuing attractiveness of parts of Aberdeenshire as a place to retire should ensure economic and household growth will continue apace over the next two decades. 7.6 The Strategic Housing Market Partnership has therefore endorsed the adoption of the high growth population and household strategic forecast scenario as the basis for assessing future housing demand and need. These forecasts underpin the Aberdeen City and Shire Structure Plan that was

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approved in 2009 and assume that in the period to 2031 population and household growth will be higher than GROS 2006-based projections indicate. 7.7 GROS 2008-based population projections suggest that the GROS 2008-based household projections, which will be published in May 2010, will project significantly higher rates of household growth for Aberdeen City and Shire than the GROS 2006-based projections and possibly the Strategic Forecasts. A review of the updated GRO figures will therefore form an important component of the first review of this HNDA during 2011, which in turn will inform the areas first Strategic Development Plan and subsequent local housing strategies. How does the net annual need figure compare to the net annual housing requirement? 7.8 Table 7.1 summarises our housing requirement forecast to 2031. These figures are derived from the strategic forecast high growth scenario and our net stock model115. Over the 25 year period from 2006 to 2031 we forecast that on average an additional 2,364 dwelling will be require each year. The table also shows that the total housing requirement may begin to ease back after 2021. Thus from 2006 to 2021, the average annual number of new dwellings required is somewhat higher at 2,617 Table 7.1: Housing Requirement High Growth Scenario 2006/11 2011/16 2016/21 2021/26 2026/31
Aberdeen City and Shire Aberdeen HMA Rural HMA
114

Total 59,090 45,418 13,673

Annual average 2,364 1,817 547

14,020 10,615 3,405

14,150 10,863 3,288

11,090 8,568 2,523

10,690 8,268 2,423

9,140 7,105 2,035

Source: Aberdeen City and Shire Strategic Forecasts 2007

7.9 Table 7.2 summarises the central, low and high estimates of net annual housing need discussed in chapter 6 alongside the forecast total housing requirement. Over the next 10 years, we project there will be an average annual shortfall of 707 affordable dwellings. 7.10 As discussed in chapter 6, the scale of this shortfall has increased over time. One reason for this has been the sustained deterioration in the affordability of entry-level priced housing. This is due to the fact house prices have risen much faster than earnings. The other main reason has been the steep decline in vacancies within the social rented sector.

http://www.gro-scotland.gov.uk/statistics/publications-and-data/popproj/2008-based-popproj-scottish-areas/index.html 115 A full explanation of this method is provided in the Strategic Forecasts at: http://www.aberdeencity.gov.uk/Statistics/sl_stt/stt_Home.asp

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7.9 The central estimate of net annual housing need is consistent with the Structure Plan which identified that somewhere between 20% and 30% of new housing across Aberdeen City and Shire would be required to be affordable housing provision of one form or another. The central estimate is also broadly consistent with the Scottish Governments 25% benchmark for affordable housing116. Table 7.2: Housing need compared to housing requirements Aberdeen Rural HMA HMA Annual Housing Requirements Annual estimated need (Central) Annual estimated need (Lower) Annual estimated need (Upper) Central estimate of need as a % of requirement Lower estimate of need as a % of requirement Upper estimate of need as a % of requirement 1,817 557 341 785 31% 19% 43% 547 150 74 230 27% 14% 42%

Aberdeen City and Shire 2,364 707 416 1,014 30% 18% 43%

Source: Aberdeen City and Shire Structure Plan and housing needs model

7.10 If affordability pressures moderate in the medium term, our lower estimate of net annual housing need suggests that there would still be a significant annual shortfall in the annual supply of affordable housing relative to need. By contrast, if affordability pressures deteriorate further, the scale of the shortfall would increase sharply. This would result in housing need becoming chronic throughout the area. 7.11 The Aberdeen HMA has a higher rate of net annual need than the Rural HMA. This is consistent with the fact that over 7 out of 10 households in the area live in the Aberdeen HMA and that entry-level house prices are much higher than those in the Rural HMA. 7.12 The Rural HMA estimate of net annual need provides a useful indicator of the extent of mismatch between need and affordable supply but the housing needs model is better suited to a predominately urban setting. Moreover, the Rural HMA does not function in the same coherent way that the Aberdeen HMA does, given the size, diversity and variable connectedness. 7.13 As a consequence of this, Aberdeenshire Council will complement HMAwide need estimates with more fine-grained analysis of demand and need pressures at a settlement level to inform their proposed local development plan and local housing strategy. 7.14 There are other options for addressing net annual housing need aside from building new affordable housing. It will therefore be important to consider which combination of policy tools might be best suited to addressing the

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Scottish Planning Policy http://www.scotland.gov.uk/Topics/BuiltEnvironment/planning/National-Planning-Policy/newSPP

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requirements of those in housing need, particularly in areas where opportunities to build new housing are limited or cost prohibitive. How do the HMA based housing need estimates translate into housing supply targets and housing land allocations at local authority level? 7.15 As chapter 1 notes, the Strategic Housing Market Partnership has confirmed that the Aberdeen HMA and the Rural HMA are the appropriate basis for assessing housing need and demand requirements. This is consistent with the geographical basis of the Aberdeen City and Shire Structure Plan which was approved in August 2009. 7.16 Structure plan policy is to focus half of all future housing growth in Aberdeen. Consistent with this, Table 7.3 shows the possible average annual affordable and market-housing requirement by housing market area and local authority area for the next 10 years. Table 7.3: Translating HMA need estimates into local authority target Annual Annual Annual Housing estimated estimate Requirements of market affordable housing2 housing1 1,182 354 828 Aberdeen City 635 203 432 Aberdeenshire (Part) 1,817 557 1,260 Aberdeen HMA 547 150 397 Rural HMA 1,182 353 829 Aberdeenshire 2,364 707 1,657 Aberdeen City and Shire
Note1: Figures are derived from the housing market level central estimate of need. The distribution of affordable housing within the Aberdeen HMA is consistent with the structure plan spatial strategy Note 2: These figures are the difference between the annual housing requirement and the affordable housing requirement

7.17 Housing supply targets and housing land allowances are contained in the Aberdeen City and Shire Structure Plan 2009117. 7.18 The Scottish Government aspires to increase the rate of housebuilding to 35,000 each year. Local policy discussions have also stressed the need to facilitate population growth and to encourage a more responsive housing market through ensuring a generous housing land supply. In response to these national and local ambitions, the structure plan has made allowance for 72,000 new homes between 2007 and 2031. The allowance of 72,000 is in addition to 12,275 units in the effective land supply on the base date of the
A background paper prepared as part of the structure plan process sets out the derivation of the housing targets and allowances at a strategic level, as well as the preliminary assessment of housing need prepared for that study (and updated in this current report). http://www.aberdeencityandshiresdpa.gov.uk/nmsruntime/saveasdialog.asp?lID=342&sID=62
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plan. Schedule 1 of the structure plan sets out the figures in more detail and shows that for the period up to 2016 the Aberdeen HMA has effective land supply plus allowances of 29,657 and in the Rural HMA the figure is 9,918. This is considerably in excess of the forecast housing requirement noted in Table 7.1. The approved split of housing allowances for each HMA and local authority are shown in Table 7.4. Table 7.4: Housing allowances by HMA and local authority 2007 2017 2024 2016 2023 2030 21,500 16,750 17,350 Aberdeen HMA 5,800 5,700 4,900 Rural HMA 16,500 10,000 9,500 Aberdeen 10,800 12,450 12,750 Aberdeenshire 27,300 22,450 22,250 Structure Plan Area
Source: Aberdeen City and Shire Structure Plan 2009

Total 55,600 16,400 36,000 36,000 72,000

7.19 The structure plan also sets targets to move towards building at least 2,500 new homes a year by 2014 and 3,000 new homes a year by 2020. Meeting these targets would see Aberdeen City and Shire meet its contribution to fulfil the Scottish annual target of 35,000 new homes and facilitate the local growth agenda. Is there evidence of imbalance in the housing system and what policy options, if any, may be required to correct this? Scale of new supply 7.20 The increase in population, combined with a trend of decreasing household size has significantly increased the demand for housing over the past 10 years, particularly during the period 2005 2007. The financial crisis has resulted in slower growth of house prices, and a reduction in sales, but prices have remained at a high level. The ability of the housing market to respond to this demand has been limited over the last 10 years and prices have been inflating at a higher rate than incomes. As a result, affordability pressures in both HMAs have become severe. There is a need to ensure conditions can be created to allow the housing market to respond quicker to changes in demand. 7.21 The recently approved structure plan has already responded to this issue by enabling a generous supply of new housing sites to come forward over the next few years. Timely completion of both Aberdeen City and Aberdeenshire local development plans is also key to identifying the sites to come forward. 7.22 However, land is only one factor and it is important that the industry is willing and able (through availability of a skilled workforce and appropriate levels of corporate and personal mortgage finance) to take up these opportunities and increase the level of new house completions. Increased

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market confidence will also be important to increase the availability of homes on the second-hand market.

7.23 Looking to the long term, demographic and economic growth will require sustained levels of new housing in both housing market areas to be achieved. The generous land supply set out in the structure plan should go some way to facilitate increased completion rates. Location 7.24 The affordability constraints and lack of supply of new housing developments within Aberdeen City have contributed to net out-migration from Aberdeen to Aberdeenshire. Levels of new development in Aberdeenshire have been higher over the last 10 years, and house buyers are able to get more for their money. However, Aberdeen remains the main focus of employment in the region and will continue to be a focus for housing demand in the Aberdeen HMA. 7.25 The recently approved structure plan seeks to promote more balanced growth than previous plans, with 50% of future development taking place within Aberdeen City, and focusing development in Aberdeenshire in three strategic growth areas. Figure 7.1 below identifies the growth areas. Figure 7.1: Strategic Growth Areas

Source: Aberdeen City and Shire structure plan

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Type 7.26 There is a need to deliver higher quality developments that provide a good mix of house types and tenures to reduce the levels of out-migration and promote a sustainable settlement pattern in the Aberdeen HMA and across Aberdeen City and Shire. A more diverse range of new build properties will help to overcome some of the uneven pressures on house prices which have seen lower quartile prices increase more rapidly than either median or upper quartile prices. 7.27 In the long term demographic trends and forecasts suggest that some increase in the proportions of smaller properties may be necessary for younger and older single person households and older couple households. 7.28 However, the mix of smaller properties that consumers want may differ from the type of smaller properties that have been developed in the past decade. For example, older people may prefer a house (as opposed to a flat) with at least 2 bedrooms with small gardens that allow them to continue to support their families through providing childcare or to enable relatives or carers to visit or stay. 7.29 The structure plan seeks to promote new development that meets the needs of the whole community, in terms of type, size, tenure and cost, the creation of sustainable mixed communities. What is the scope for a mix in the range of tenures, including private rented sector, to assist in meeting identified need and demand? 7.30 The private rental sector plays a pivotal role in meeting housing demand throughout Aberdeen City and Shire, including demand from households moving for employment or education related reasons. Potentially, the private rented sector could play an important role in meeting housing need in a context in which funding constraints may very well extend the timescales over which it is feasible to construct the levels of new affordable housing provision sought. 7.31 However, enhancing the role of the private sector to assist in reducing housing need is constrained by a number of barriers. In the Aberdeen HMA, especially the City: There is very high demand for private renting in the City relative to supply. This demand comes from a diverse range of households. This includes students, contract workers that are seeking short term lets, migrant workers, households who have deferred house purchase or prefer to rent and lower income households that have been unable to secure a social rented tenancy. Although there has been some increase in supply (mainly because owners have been reluctant to sell until house prices recover), the cost

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of renting is high. The LHA rent rates used for calculating housing benefit are comparable to the cost of purchasing an entry-level property. Both the LHA rent levels and advertised rents levels, which tend to reflect the middle to upper end of the market are in excess of those elsewhere in Scotland. There are therefore few incentives for private landlords to let to lower income households or to enter into private leasing arrangements with the local authority. Members of the Strategic Housing Market Partnership report that an upturn in gas and oil related companies block renting properties since the start of 2010 has contributed to rising rents, particularly for smaller 1-3 bedroom properties and to further deterioration in private rental vacancies in recent months.

7.32 In terms of the Rural HMA, households that already live in the private rented sector tend to see this as providing a long term home, with the result that vacancy rates are very low. 7.33 However, perhaps the biggest barrier is that little is known about the structure and functioning of the private rental market across the Rural HMA and how it is changing over time. The Strategic Housing Market Partnership has therefore asked that greater prioritisation be given to improving the evidence base on the private rented sector in the coming months to inform the 2011 HNDA update. 7.34 Chapter 6 notes that perhaps 3 out of 10 new households that form each year are unlikely to have the resources to access market priced housing even if prices were to moderate. This proportion appears to have changed little in recent years and many rely on Housing Benefit and other state benefits. By contrast, the numbers of new households stuck in the gap between social housing and the private market have increased as a direct consequence of increasing affordability pressures. It is this latter group that LIFT products and other intermediate housing options are intended to assist. 7.35 Both local officers and developers report strong latent demand for LIFT products, especially across Aberdeenshire but mortgage-funding constraints have curtailed effective demand. 7.36 One possible response to this short-term constraint may be to place greater emphasis on social rented provision and/or intermediate rent products, which might also assist site viability. What are the needs of specific population sub-groups and what policy options are available to address these specific concerns? 7.37 Chapter 5 explored the potentially distinctive housing concerns and requirements of several population sub-groups. These different community groups and their distinctive housing concerns and requirements are listed in Table 7.5.

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7.38 Aside from households that contain someone with a disability, available evidence suggests that for most households that fall into one of these population sub-groups, as with the population at large, the main barrier is constrained access to general needs private or social housing of a suitable type and size. In particular the lack of larger houses suitable for households with children in the City is a growing problem as evidenced by the increase in overcrowding in all tenures. Table 7.5: Particular need support options Group Proportion and trend Older People 15.6% over the age of 65, and projected to increase significantly People with a Estimated to make up physical approximately 16% of the disability population, and projected to slightly decline over time People with a Estimated to be learning approximately 1% of the disability population and projected to increase slightly over time

Distinctive needs and concerns Range of support from sheltered housing to tailored delivery of support and services Need for specialist and adapted properties

People with mental health or substance misuse issues Families and lone parent households Ethnic minority households

Unknown

Range of support that may change, accommodation needs can vary from mainstream housing with support for or supported tenancies, grouped accommodation or registered care home facilities for those with complex needs. Varying levels of housing support commensurate with their particular need

Estimated to be approximately 25% of all households, and projected to increase. Approximately 2% of the population.

Overcrowding and lack family housing in city Particular housing types and sizes.

Migrant workers

Research evidence indicates that to suggest this groups housing needs and requirements are any different from the general population Some members of this community may however, experience harassment or other types of discrimination which require management solutions Over 7,000 NiNo Research indicates that the registrations in 2008/09, housing need is very similar to that however, registrations does of the indigenous population; not monitor the outflow of however some members of this migrants leaving the country community may experience nor their length of stay and harassment or other types of cannot provide stats of the discrimination which require overall stock of migrant management solutions. Page 195

Group

Gypsy Travellers

Proportion and trend workers at any particular point in time. Estimated to make up 0.1% of the population. Future trends unclear.

Distinctive needs and concerns

Occupational travellers

Unknown, although, likely to be very small proportion.

Students

Approximately 3% of the population of Aberdeen City, with a lower proportion expected in Aberdeenshire.

Homeless households, including younger adults and women

Approximately 2% of households across the area. Trends suggest an increasing trend.

This group has a distinct need. Recent research concluded that there is a need to review local planning policies in respect of the development of private Gypsies/ Travellers sites. In addition, the study team pointed to a need for Aberdeen City and Aberdeenshire to investigate the possibility of sharing transit sites with a maximum capacity of six pitches per site. Travelling show people regularly use sites agreed by both local authorities to hold their funfairs/circuses throughout the summer. However, as few, if any, have winter quarters in the area, it does not appear that they have any ongoing housing requirements. This group have a significant need for shared accommodation which can be student accommodation halls or shared houses / flats which will often be Houses in Multiple Occupation. Most homeless applications are from single persons, but there has been some increase larger households, most of whom are lone parents. For many, including most lone parents, the main challenge is constrained access to housing, often linked to a change in financial circumstances following relationship breakdown For younger adults, especially those under 18 years, and /or have previously been in care it is unlikely their needs will be met unless access to a home is accompanied by housing related support. For women and other individuals fleeing domestic violence, there is

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Distinctive needs and concerns lack of emergency access accommodation but plans to expand provision in the coming months may go some way to address this problem Lesbian, Gay, Approximately 5% of the The requirement of this diverse Bisexual and population. community mirrors those of the Transgender general population. Some members may however, experience harassment or other types of discrimination which require management solutions. 7.39 Although there appear to be few substantive bricks and mortar issues, various national and locally commissioned independent research studies highlight a plethora of distinctive housing related support and social care needs. 7.40 Set against this however, is that there are few timely and routinely updated sources of data on some of these groups. The updated housing needs and demand assessment to support the Strategic Development Plan and Local Housing Strategies to be produced in 2011 will therefore outline plans for improving information flows in respect of several key groups.

Group

Proportion and trend

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8.

Monitoring and updating the assessment

Background 8.1 The preceding chapters set out the housing need and demand in Aberdeen City and Shire, drawing on key evidence in accessing the current market and considering the likely future trajectory of change. 8.2 The key drivers of the housing market are dynamic and can change very quickly, in turn affecting the performance of the housing market. The Aberdeen City and Shire Strategic Housing Market Partnership therefore need to monitor trends and activity in the housing market in a co-ordinated and timely manner. 8.3 The assessment also needs to be updated on a regular basis. Scottish Government guidance identifies this as a five-yearly review cycle to coincide with the preparation of strategic development plan main issues reports and local housing strategies. Monitoring the Assessment 8.4 The assessment is intended to be continually and proactively monitored, responding to a range of indicators used to assess the housing market as a whole. As a considerable amount of monitoring is already carried out within the partnership, it is important that a coordinated approach is taken to ensure the most efficient use of resources and expertise. 8.5 A sample of current monitoring arrangements related to the assessment are presented in Table 8.1 below. Table 8.1: Current monitoring arrangements
Monitoring
Aberdeen City and Shire Structure Plan Housing Land Audit LHS Annual Update118 SDPA Housing Market Activity

When
March September August March and September

Regularity
Annual Annual Annual Twice a year

Updating the Assessment 8.6 Housing need and demand assessments provide a robust basis for developing housing and planning policies by considering current and future housing need and demand over the longer term. Guidance suggests that partnerships should not need to undertake comprehensive update of the

118

Both Aberdeen City and Aberdeenshire councils will begin preparation of their LHS over the course of 2010/2011 and subsequently will prepare an annual update.

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assessment more frequently than every five years, however, it is also recognised that they should be reviewed regularly. 8.7 The Aberdeen City and Shire assessment will be updated in early 2011 to inform the main issues report for the strategic development plan and the local housing strategies to be prepared by the two councils. This update will consider many of the key assumptions and update the key data sources. The set of data sources likely to be key in the 2011 update are as follows (Table 8.2); Table 8.2: Key data sources for the 2011 update
Source
GROS GROS GROS GROS GROS NHBC ACC / AC ACC / AC ACC / AC National Statistics National Statistics University of the West of Scotland CACI

Data
Population Estimates (mid-2009) Household Projections (2008-based) Household and Dwelling Estimates (mid-2009) SDPA Population Projections (2008-based) SDPA Household Projections (2008-based) Housing Starts and Completions Housing Land Audit Housing Waiting List Strategic Forecasts Update Annual Survey of Hours and Earnings Unemployment rates Sasines 2009 House Prices Household Incomes

Timing
28 April 2010 20 May 2010 20 May 2010 10 June 2010 September 2010 Quarterly September 2010 As required Early 2011 January 2011 Monthly August 2010 August 2010

8.8 Appendix 9 provides a more comprehensive catalogue of the data sources used in this assessment and the frequency at which they are updated. This will be important for future updates. The 2011 Census results will be available to inform the first 5-yearly review in 2015/16 and should provide a valuable source of information.

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Glossary
Affordability is a measure of whether housing may be afforded by certain groups of households. Affordable housing is housing made available at a cost below full market value, to meet an identified need. It includes social rented housing, subsidised low cost housing for sale (discounted, shared ownership or shared equity) and low cost housing without subsidy (entry level housing for sale). Private rented accommodation available at lower cost than market rents, (midmarket rent), should also be considered within the affordable housing category. An Allocation Policy defines how Aberdeenshire Council carries out its statutory duty of allocating houses based on an assessment of housing need of applicants. Common Housing Register involves a single form for all applicants in a particular area to complete and a single pool of applicants from which social housing partners can select prospective new tenants. Within those broad principles, participating landlords are free to prioritise, select and rehouse applicants according to their own unique allocations policy. A concealed household refers to a household of unrelated adults sharing a kitchen, bathroom or WC with another household but not sharing meals. A forecast of housing needs or requirements is a prediction of numbers which would arise in future years based on a model of the determinants of those numbers and assumptions about (a) the behaviour of households and the market and (b) how the key determinants are likely to change. It involves understanding relationships and predicting behaviour in response to preferences and economic conditions. Headship rates measure the proportion of individuals in the population, in a particular age group, who head a household. Projected headship rates are applied to projected populations to produce projected numbers of households. A household is one person living alone, or two or more people living together at the same address as their only or main residence who share at least one meal a day together or who share a living room (e.g. 5 adults sharing a house like this constitute one 5-person household). Household formation refers to the process whereby individuals in the population form separate households. Gross or new household formation refers to households that form over a period of time, conventionally one year. This is equal to the number of households existing at the end of the year that did not exist as separate households at the beginning of the year (not counting successor households, when the former head of household dies or departs). Net household formation is the net growth in households resulting Page 200

from new households forming less the number of existing households dissolving (e.g. through death or joining up with other households). Houses in Multiple Occupation (HMO) is a property that is occupied by 3 or more persons from different families as their main or any residence. An HMO can include hostels, halls of residence, bed-sit, shared flats and houses, and some hotels and guesthouses. Housing demand is the quantity and type/quality of housing which households wish to buy or rent and are able to afford. Housing land requirements is the amount of land required to be allocated for housing to meet the identified housing requirement. Housing market area is a geographical area which is relatively self-contained in terms of housing demand; i.e. a large percentage of people moving house or settling in the area will have sought a dwelling only in that area. Housing need refers to households lacking their own housing or living in housing which is inadequate or unsuitable, who are unlikely to be able to meet their needs in the housing market without some assistance. Housing requirements are the total amount and type of housing necessary to accommodate a given (or projected) population at appropriate minimum standards. This includes both housing needs and housing likely to be demanded in the market. Housing size can be measured in terms of the number of bedrooms, habitable rooms or floorspace. This guidance uses the number of bedrooms. Housing type refers to the type of dwelling, for example, flat, house, specialist accommodation. Intermediate affordable housing is housing available at a cost below full market value to meet an identified need and includes: subsidised low cost housing for sale (discounted, shared ownership or shared equity); low cost housing without subsidy (entry-level housing for sale); and mid market renting. Lending multiplier is the number of times a households gross annual income a mortgage lender will normally be willing to lend. The most common multipliers quoted are 3.5 times income for a one-income household and 2.9 times total income for dual income households. LIFT is a shared equity scheme introduced in Scotland in September 2005 aimed at helping people on low incomes who wish to become homeowners but cannot afford to pay the full price for a house. The scheme will be run by the Scottish Government housing and investment division. It is envisaged that a registered social landlord (RSL) will fund part of the purchase price of the house using a LIFT grant.

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Lower quartile means the value below which one quarter of the cases falls. In relation to house prices, it means the price of the house that is one-quarter of the way up the ranking from the cheapest to the most expensive. Market housing is private housing for rent or for sale, where the price is set in the open market. Migration is the movement of people between geographical areas. In this context it could be either local authority districts, or wider housing market areas. The rate of migration is usually measured as an annual number of individuals, living in the defined area at a point in time, who were not resident there one year earlier. Gross migration refers to the number of individuals moving into or out of the district. Net migration is the difference between gross in-migration and gross out-migration. NOMIS is a service provided by the Office for National Statistics, to give free access to the most detailed and up-to-date UK labour market statistics from official sources. Non-self-contained accommodation is where households share a kitchen, bathroom or toilet with another household, or they share a hall or staircase that is needed to get from one part of their accommodation to another. Primary data is information that is collected from a bespoke data collection exercise (e.g. surveys, focus groups or interviews) and analysed to produce a new set of findings. A projection of housing needs or requirements is a calculation of numbers expected in some future year or years based on the extrapolation of existing conditions and assumptions. For example, household projections calculate the number and composition of households expected at some future date(s) given the projected number of residents, broken down by age, and an extrapolation of recent trends in the propensity of different groups to form separate households. Private sector housing is housing for or rent provided by private developers or other commercial organisations. The term owner occupied sector excludes the private rented element. Registered Social Landlord (RSL) is a landlord that provides housing for rent (and low cost home ownership). The commonest form of registered social landlord in Scotland is a housing association Relets in this context are social rented housing units which are vacated during a period and become potentially available for letting to new tenants, or tenants transferring. Net relets are total relets, or turnover, minus transfers and successions (where the tenancy is transferred to an existing occupant such as the child or spouse of the previous tenant).

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Scottish Housing Quality Standard (SHQS) defines what Scottish Government constitutes acceptable good quality housing. Local authorities and other registered social landlords will have until 2015 to meet the standard. Secondary data is existing information that someone else has collected. Data from administrative systems and some research projects are made available for others to summarise and analyse for their own purposes (e.g. Census, national surveys). Shared equity schemes enable people to buy a home in partnership with a registered social landlord. An owner generally pays between 60 and 80 per cent of the price of a home with the remainder held by a registered social landlord using a Government grant. Shared ownership schemes provide housing that is available part to buy (usually at market value) and part to rent. Social rented housing is general and special needs housing provision by registered social landlords, local authorities and other social housing providers for rent.

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Acronyms
ABI AHMA APSR ASHE CML CNP CNPA DWP GDP GHF GP GROS GVA HB HMA HNDA ILO LGBT LHA NHBC NHER NINo ONS RHMA RSL RTB SAP SCORE SHCS SHE SHQS SHS SIMD SRPBA TACA UKCS Annual Business Inquiry Aberdeen Housing market Area Annual Performance and Statistical Return submitted by RSLs Annual Survey of Hours and Earnings Council of Mortgage Lenders Cairngorms National Park Cairngorms National Park Authority Department for Work and Pensions Gross Domestic Product Gross Household Formation General Practitioner General Register Office for Scotland Gross Value Added Housing Benefit Housing Market Area Housing Needs and Demand Assessment International Labour Organisation Lesbian, Gay, Bisexual and Transgender Local Housing Allowance National House-Building Council National Home Energy Rating National Insurance number Office for National Statistics Rural Housing Market Area Registered Social Landlord Right to Buy Standard Assessment Procedure for energy ratings Scottish Continuous Recording System Scottish House Condition Survey Survey of English Housing Scottish Housing Quality Standard Scottish Household Survey Scottish Index for Multiple Deprivation Scottish Rural and Property Association The Aberdeen City Alliance United Kingdom Continental Shelf

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