Rapid Evidence Assessment of the Research ... - Rural Housing

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Rapid Evidence Assessment of the Research Literature on the Purchase and Use of Second Homes • 40 per cent of second home sales were in the lower Council Tax bands A to C, and the most popular price range was £100,000 to £200,000 which directly competes with local residents, and as a result, • second/holiday homes were “likely to be having a significant impact on restricting access for local households to the relatively more affordable end of the housing market” (Craigforth Consultancy and Research, 2007, p71). 89. 28 However, once again, the dynamics of this equation were not analysed in detail. 90. Previous research has suggested a link between local house price inflation and growth in the number of second homes. For example studies in the 1970s and 1980s suggested that competition for houses can be exacerbated by second home ownership, leading to a bidding up of prices, and that there was a statistical association between second homes and house prices (Jacobs, 1972; Clark, 1982). However, these early studies did not take into account the full complexity of local housing markets, and the wide range of possible influences. 91. An unpublished study by Prof. Glen Bramley and colleagues made an attempt to model price impacts at a local authority level. The econometric model was based on changes in housing market conditions at neighbourhood scale across England in the period 1988-20051 . The range of variables represented in the modelling included: • economic and labour market factors at the regional level • supply and housing tenure factors at both regional and ward levels • housing type composition at ward level • urban form variables relating to density, green space, gardens, etc. • neighbourhood socio-demographics including poverty measures • location and access measures • housing vacancies • ward and regional level new supply measures 92. In terms of its coverage of the whole of England at ward level and the range of variables included, this exercise is probably the most comprehensive modelling carried out on neighbourhood housing markets. 93. The model estimated that for a 1 percentage point higher incidence of second homes house prices would be 1.4 per cent higher, all other things being equal. For example, there were 234,000 second homes in England in 2005, representing 1 per cent of the total housing stock. The model would estimate that this would have been sufficient to raise all house prices by 1.4 per cent (or £5,400 on average at 2005 prices) over and above what they would otherwise have been. In local authorities that had a higher proportion of second homes than the national average, the impact on prices would be greater. In 2005 a total of 28 of Local Authorities had house prices raised by more than 5 per cent as a result of a high incidence of second homes. 94. The most straightforward explanation for this impact is that second homes represent an additional demand for housing and that, given constrained supply, this feeds into higher prices. However, there are other possible interpretations. In particular, second homes may be a proxy for some unmeasured quality of localities (e.g. picture postcard scenery, etc.). This quality may make the location attractive to both second home buyers and also to general homebuyers, who have some locational choice and will pay more to live in an area that is especially attractive. The model does try to control for area characteristics to some extent but the latter is still a possible explanation. It should also be noted that the house price data relates to 2005 price levels and therefore reflects market conditions at that time.
Future trends To what extent (if any) have second homes increased house prices; and have they crowded out prospective first-time buyers? 95. An important question is the likely trajectory of the second homes market and, whilst it is not possible to predict price trends, Gilbert (2001) identified a number of demographic trends of significance to the potential growth of the second homes market: • the largest growth in the population to 2021 will be among 50 to 64 year olds, predominantly baby boomers born in the 1950s and 1960s who will be approaching retirement and who may be attracted to owning a second home; and • those aged 65 and over, are projected to increase by 32 per cent between 1996 and 2021, who may be attracted to owning a second retirement home. 96. As Gilbert states: “Much will depend on whether more households choose and/or are able to release equity from their main residence and house prices continue to appreciate steadily in the coming years. Interest rates need also to remain stable and relatively low. For the baby boomers contemplating retirement, property will in many cases be bound up with a choice of lifestyle. A second home will be part of that lifestyle be it close to a golf course/yachting marina, in a smart city centre or even as an alternative to investment in equities” (Gilbert, 2001, p38). 97. The 2005 Direct Line Study estimated that the number of UK second homes was to rise by 24 per cent by 2015, increasing from 328,000 to 405,000 by 2015. This increase of 77,000 second homes means an average annual growth of 3.2 per cent. This would suggest that second homes in England could increase by an average 7,700 per year (from a base of 241,000). This though would depend on economic circumstances. 1 The model used was developed as part of an earlier study published by the JRF study in May 2007, entitled Transforming Places: housing investment and neighbourhood market change. 29
Page 1 and 2: Rapid Evidence Assessment of the Re
Page 3 and 4: Contents Foreword 7 Executive Summa
Page 5 and 6: Foreword by Professor Glen Bramley
Page 7 and 8: Executive Summary There is much dis
Page 9 and 10: Executive Summary There is a lack o
Page 11 and 12: Introduction 6. We have also applie
Page 13 and 14: How have second homes been defined
Page 15 and 16: Definitions used in the UK Census H
Page 17 and 18: 42. How have second homes been defi
Page 23 and 24: To what extent (if any) have second
Page 25: Number of Second Homes 85. To what
Page 29 and 30: What specific factors attract peopl
Page 31 and 32: What specific factors attract peopl
Page 33 and 34: What is the geographical distributi
Page 35 and 36: What is the geographical distributi
Page 37 and 38: 6. What are the social and demograp
Page 39 and 40: What are the social and demographic
Page 41 and 42: 7. Do households own more than one
Page 43 and 44: Has there been any improvement in t
Page 45 and 46: 9. What are the social and economic
Page 47 and 48: Social impacts 183. Gallent et al (
Page 49 and 50: What are the social and economic im
Page 51 and 52: 10. Evidence Gaps and Further Resea
Page 53 and 54: Evidence Gaps and Further Research
Page 59 and 60: References Communities and Local Go
Page 61 and 62: References Office of Population, Ce
Page 63 and 64: Appendix A Direct Line Sources Data
Page 65: National Housing and Planning Advic

Rapid Evidence Assessment of the Research ... - Rural Housing

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