Are household projections accurate?

There were 23.4 million households in England according to the 2021 Census. This figure represents an increase of 6% on the number of English households in 2011, a slightly slower rate of growth than recorded over the previous decade. Households are more heavily weighted towards London, the South East and North West, with 44% living in these regions.

The Census data allows us to carry out a reliable once-per-decade check on population, both at national and at a more local level.  In between Censuses, the ONS produces household estimates and projections to help guide delivery of key infrastructure and services. The 2014-based release of the projections are used as the basis of the Government’s assessment of housing need. 

The 2014-based projections expected the total number of households across England would reach 24.3 million by 2021. The 2021 Census recorded 935,000 fewer households, representing a fall of 4% on the previous projections. The number of households fell below previous projections across all regions, with Census figures more than 12% lower than projections in London, a difference of almost half a million households.

The London difference can partly be explained by the timing and question structure of the Census. Results were collected in mid-March 2021, during a lockdown introduced to mitigate the impact of the Coronavirus pandemic, the third since March 2020. The Census asked where people lived, rather than where they usually lived, and therefore captured a moment in time, when those who had the option to live elsewhere had left urban areas, seeking more space. Although London is the only region to show this, the same pattern is seen in many urban local authorities.

This brings into question the usefulness of Census households in setting planning policy at a local authority level. The figures represent a temporary shift in living preferences to when rural living was more desirable. However, this trend is reversing at a considerable rate, reflecting a full vaccination rate across England of 75.8%, and the unlikely return to lockdown conditions of 2020. Failure to recognise this reversal will mean inadequate provision of new homes across key cities, heightening existing issues of affordability and reducing opportunities for future economic growth.

Figure 1 – Households by region (Census and household projections)

A challenging market for new home delivery

At a local authority level, urban centres are among those where current households are most likely to fall below previous expectations. Households in London are significantly lower, with 3.42 million households across the capital according to the 2021 Census, 12% below 2014-based projections. 

Cities across the country follow a similar pattern, with Census households falling below projections in Birmingham (-7%), Manchester (-8%) and Liverpool (-8%). This further highlights the problem of holding the Census immediately after a sudden, unique and temporary movement of the population away from urban areas. The mismatch in households and projections highlights the challenges of supplying a sufficient supply of new homes in areas with high demand and low land availability. The maps below show the mismatch between current households and previous projections alongside historic rates of delivery against need.

Figure 2 – 2021 Census households as a proportion of 2014-based household projections

The two maps show the same pattern, with areas failing to meet housing need mirroring those with fewer households than previously projected. The relationship between the two maps is straightforward, households have been unable to form due to an insufficient supply of new homes.

Figure 3 – Average annual delivery (five years to 2021) as a proportion of annual housing need

Households, homes and the feedback loop

Minor regional differences between households and projections can disguise significant shifts at a local authority level. Across 309 local authorities in England, seven (2%) had 2021 Census figures at least 5% higher than household projections. At the other end of the scale, 86 (28%) recorded at least 5% fewer households than were projected in 2014.

Our analysis shows that local authorities with a poor track record of delivery are more likely to have household projections that exceed the numbers recorded in the Census.  This shows that household formation in these locations has been supressed because too few new homes have been built for households to form into.

We have divided the country into places where housing delivery has exceeded need, based on the standard method, and places where delivery has fallen short.  Within these groups, we have then compared the projected number of households at a local authority in 2021, according to the 2014-based household projections, with the actual number from the Census.

This shows that the local authorities delivering significantly less than need recorded census household numbers almost 10% lower than 2014-based household projections. At the other end of the scale, those delivering well in excess of housing need have census figures slightly exceeding household projections by 1.0%.

Figure 4 – Household differences at local authority level

How many people does it take to make a household?

The insufficient delivery of new homes reduces the capacity for households to form. Supressed household formation can disguise the fact that not enough homes are being built, and can be used to inform artificially low housing need figures. Suppressed household formation is illustrated by comparing population growth with household growth, and identifying changes in the size of households.

According to the 2021 Census, there are an average of 2.41 people living in each household in England. This represents a very small increase on 2011, when the average household comprised of 2.40 people. While not a huge increase, the difference between Census figures and household projections is stark. The 2014-based household projections expected the number of households to increase at a faster rate than the population, resulting in 2.35 people per household by 2021, a fall of 2.08% on 2011.

The number of people per household was expected to fall across all regions, ranging from 1.9% in the West Midlands, to 3.4% in London. Census figures show that household sizes have fallen in just four of the regions, albeit not as substantially as previously expected. Elsewhere, households have grown in size, most substantially in London, where an average household of 2.57 people represents an increase of 2.7%.

Across England, people have adapted to the insufficient delivery of new homes by living at home with their parents for longer, or by living with others in shared accommodation. This under-representation of new households will not only impact the number of homes planned for, but could also increase the risk and frequency of overcrowding in homes across the country.

Figure 5 – 10 year change in population and households

The impact of suppressed household formation on planning

An accurate understanding of household numbers is important for both plan-making, with household figures used to inform the principle and scale of potential new developments relative to existing settlements. 

Household projections also form the basis of the Government’s standard approach to calculating housing need. Under the calculation, affordability ratios are used to adjust projections to produce initial housing need figures. These are capped at 40% above the existing requirement for new homes, with an additional 35% applied across 20 core cities. Accurate household projections are vital in ensuring these figures are an accurate reflection of housing need. In decision-making, planning applications and planning appeals both require an accurate view of the size and number of households to a granular level. Negotiations over public open space, education and healthcare provision initially draw from the average number of people per household, so any inaccuracy can impact delivery of key infrastructure.

Household projections play a critical role in our planning system, guiding the scale and location of new home delivery. Projections are based on historic household formation rates, so if these are suppressed we will continue planning for an insufficient number of new homes.