Final Economic Viability Report September 2009 - pdf

3.6 By implication, this study does not analyse viability on specific housing sites that may come forward in
the future. Whilst the hypothetical sites have been selected using the findings of the Strategic Housing
Land Availability Assessment (SHLAA) and SHMA, specific sites have not been modelled. There will
always be a wide range of specific circumstances that will affect viability on particular sites, and
developers will assess these in determining whether to proceed. In addition, developers are not
homogenous. They vary in their appetite for risk, and have different requirements in terms of returns.
In addition, those requirements may change in different market contexts. The development appraisal
technique developed for this study could, however, be readily applied to an individual site if required.
3.7 It is also important to note that the analysis undertaken for this study was prepared during June 2009,
and data on land values, sales prices and number of other variables relates to this date. Some of
these variables may have changed since the analysis was undertaken. Indeed, given the current
evidence of stabilisation at the bottom of the housing market, the variables are likely to continue to
change over the coming months and years and there is the possibility of market circumstances both
improving and falling further. The housing market is dynamic, always changing and any study can
only provide a snapshot of viability. This should remain an important consideration when reviewing
this report. The current and unprecedented state of the housing market will have an impact on the
viability of affordable housing, and indeed the agreed valuation date of June 2009, has a significant
impact on the variables inputted to the model.
3.8 With this in mind, DTZ have modelled a range of other market scenarios, to enable SDC’s policy on
affordable housing to react to changing circumstances across the life of the policy and to enable any
changes or redrafting of the policy to have regard to the impact of delivering affordable housing
across the market spectrum from the height of the market to the current unstable uncertain position.
3.9 The remainder of this section of the report sets out the assumptions on which the analysis is based
and the sources of information that underpin those assumptions. In a strategic study such as this, it is
necessary to generalise but where appropriate, we comment on how the specific circumstances of
particular sites and the expectations of the developer, or the costs and revenues of the project may
vary from the assumption and hence affect the viability of that particular development. This helps to
eliminate some of the issues that will apply in the application of the policy as we move forward
through changing market cycles.
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