Household population projections are fundamental in determining the level of growth to be delivered in many plans and frameworks. Not only do they directly inform the housing requirement within an area – and therefore the number and size of sites to be allocated – they also have an indirect influence on the anticipated amount of commercial, retail and employment floorspace that is required to service its population.

As the country moves to more localised energy sources, such as wind turbines and solar, the rate of development is also likely to have a greater influence on energy policy than it has in the past.

In August, the Welsh Government published a draft National Development Framework (NDF) for Wales. Media reports focused on its headline requirements of 114,000 new homes across Wales over the next 20 years.

While this may look like a big number, it is actually less than half that of recent Local Development Plan (LDP) housing targets. Savills has looked at the science behind the figure and its implications for the housebuilding sector in Wales.

Where does the new figure come from?

The 114,000 requirement is derived from a central estimate of the 2018-based regional household population projections. This number is further broken down by the NDF into three regions; with 57 per cent (64,980) directed to South East Wales, 24 per cent (27,360) to Mid & South West Wales and 19 per cent (21,660) to  North Wales.

The graph below compares these figures against the regionalised annual housing requirement set out in currently adopted LDPs for the three NDF Regions.

Comparison of annual LDP vs projected NDF housing need

How do the different figures compare?

While the housing requirements in most adopted LDPs are based on household population projections – and reflected a going for growth strategy that saw housing underpin wider economic aspirations – the NDF’s reduction is staggering. In South East Wales, for example, adopted LDPs have an annualised housing requirement of 6,832 homes, while the projections that the NDF uses show an annual requirement of just 3,359 homes – 51 per cent fewer.

What does this mean for LDPs?

We are starting to see the impact of lower household population projections on those local planning authorities which are undertaking LDP reviews. Take Merthyr Tydfil County Borough Council, for example, where the adopted LDP sets a housing requirement of 253 homes per year whilst the deposit replacement LDP sets a considerably reduced requirement of just 150 homes per year - 41% less. This will have a significant knock-on effect on the number of housing sites allocated for development.  

But this only tells part of the story. The graph above does not show how the population is projected is to change year on year, something that is shown in the graph below.

Change in annual housing need over 20-year timeframe

Looking ahead

While the number of households is projected to grow at a similar rate as at present for the next five years, all three regions are expected to experience a dramatic and continuous decline in the following years. Such is the degree of decline that by 2037/38 there may be a housing requirement of just 318 units in North Wales and 364 units in Mid & South West Wales.

For context, the projected annual housing requirement in Mid & South West Wales at 2037/38 is around a third of the annual housing requirement currently set in Swansea’s LDP alone.

The key risk is that these figures could become targets rather than starting points which can be adjusted to reflect more detailed demographic analysis or wider economic aspirations. This could be compounded by the NDF’s very light touch on the economy and the infrastructure that will drive growth.

The NDF is also silent on the benefits of housebuilding in terms of providing jobs, improving affordability and increasing housing choice. Indeed, the low figures appear to be at odds with the political agenda of prioritising housing delivery as well.

It will be interesting to see how the figures break down to local authority level when the 2018-base dated local household population projections are published in October this year. It is these figures that are likely to inform many of the replacement LDPs.

Further information

Contact Savills Planning