Shifting demographics pose a challenge for Cambridge

Cambridge rightfully has a reputation as one of the most beautiful cities in the country. Its heritage value is difficult to overstate, with over 20 listed buildings per square kilometre, and just behind Oxford and central London with its density of Grade I listed buildings. The city’s local plan nods to this, stating: “An essential aspect of Cambridge’s attractiveness as a place to live, work, study and visit is its character”. A key challenge for the city will be how it continues to grow and adapt to changing requirements without losing that rich character. One of those key challenges will be a significant demographic shift. Oxford Economics predicts the numbers of residents aged over 60 will grow by 29% between 2021 and 2031. The population aged 25–59 is expected to fall by 12%. This is a direct consequence of the city’s unaffordability, as younger households cannot afford to move into or stay in Cambridge.

As the current population ages, Cambridge will see fewer economically active households. Well-targeted policy and development will be required to attract and retain these younger households within the city itself, rather than settling further out. Losing these types of households could have negative consequences for footfall and therefore the retail and leisure offering within the city centre.

Cambridge needs more homes to match the growth in jobs

This is a challenge of the housing market, not the labour market. Employment and productivity is very strong in the city, with total employment expected to grow by 9% over the next ten years. This growth will be driven by further expansion in the already well-established science, tech, IT and professional services sectors.

Cambridge has the jobs to attract a range of households, but not the housing market to retain them. Instead, we see a significant number of workers within the city living outside of it in the more affordable towns nearby. The 2011 census showed just shy of 50,000 people driving into Cambridge for work, which has a significant environmental footprint. Cambridge also risks losing potential workers who reject the commuter lifestyle and would rather live in a more affordable city with an easier journey to work.

Perhaps the best way to address affordability and retain residents is with increasing supply of housing. The preferred method of estimating housing need has swung about over the past year or so, but the current system suggests that Cambridge needs 658 homes per year, with 3,854 needed across the county as a whole. This is a bare minimum, however. To make a significant dent in unaffordability, many more homes will be needed. These homes will also need to be of the right type, and in the right place.

The right homes for the right households

The Standard Method provides a target for the number of homes needed but gives no steer on the type of homes. A significant number of the wrong types of homes can be actively harmful to the local market. We’ve split the owner-occupied households by composition and value to help give a steer on the largest segments of the market, and the price points these different types of household are currently used to.

Cambridge itself, for example, has a large proportion of single households. They make up 30% of the market and live in homes that are on average 300 per square foot. Sharers snap up the cheapest homes in the city, at 220 per square foot, with on average 3.5 adults to each sharer household. For much of the rest of the county the values are lower, but also show much less variation between household type. This suggests developers will need to be much more targeted in Cambridge than the rest of the county.

Future growth will require a balancing of factors

While home ownership is an aspiration for many, the large, affluent rental demographic in the city will also need to be catered for. There is a clear demand for high-quality rental homes for professionals. Balancing the needs of the different types of households, along with delivering homes that allow for sustainable lifestyles will be a key priority for policymakers and developers within and around the city.

Greater collaboration between local councils, developers and infrastructure providers will help deliver new sites in a more cohesive manner, particularly key for urban extension and new settlement projects where affordability, infrastructure and sustainability will all need to be balanced.

_{Read the articles within Cambridge: Thriving on Innovation below.}