Housing and regeneration outcomes framework: indicator updates

A well functioning housing system

• summary table
• availabilty and choice 
• homes that people can afford

• growth of supply

Summary table on indicator measures for a well functioning housing system

Indicator	Previous Value	Latest Value	Performance	Previous Update	Latest Update
Number of occupied dwellings in Scotland	2,538,755	2,562,668	Improving	Sep'20	Sep'21
Gap in % Satisfied with house between lowest 3 deprivation deciles and the Average	5.6%	5.1%	Maintaining	2018	2019
Number of Loans for House Purchase	55,774	69,779	Improving	2020	2021
Ratio of housing costs to Income	7.8%	7.5%	Maintaining	2018/19	2019/20
Increase the number of new homes (*) excluding conversions in 2021/22	15,360	20,852(*)	Improving	2020/21	2021/22
Effective Housing Land Supply - Number of Housing Units	N/A	N/A	N/A	N/A	N/A
Strength of Construction (GVA)	75.3	86.9	Improving	2020	2021

Availability and choice

Chart 1 – Number of Occupied Dwellings in Scotland (Source: National Records for Scotland - Household Estimates)

Over the past 14 years the number of occupied dwellings has increased by 220,677 (9.4%) from 2.342 to 2.563 million.

This represents an annual average increase of 15,763, with the largest increase occurring in the latest year between 2020 and 2021 (23,913), following a small increase of 10,994 between 2019 and 2020, during which supply of new housing which was affected by the Covid-19 pandemic.  The smallest increase over the period was  between 2010 and 2011 (10,204).

This indicator incorporates population and household growth, in that an annual increase of between 10,000 and 15,000 is considered to be a ‘maintaining’ position. An annual increase of more than 15,000 is required to show this indicator as ‘improving’ and any decrease or increase less than 10,000 will show it as ‘worsening’.

The increase of 23,913 between 2020 and 2021 represents an ‘improving’ position.

Chart 2 – Dwellings by Tenure (Source: Scottish Government - Housing Statistics for Scotland - 'Stock by Tenure' Table)

Between 2007 and 2020, the biggest change in dwelling tenure has been in the Private Rented Sector:

• Private Rented Sector (or living free): +148,000 (+60%) to 395,000 (although note that the latest estimate for 2020 isn’t directly comparable to results for previous years due to impacts from Covid on the survey estimates used)
• Local Authority Rent : -29,000 (-8%) to 317,000
• Housing Association Rent:  +30,000 (+11%) to 291,000
• Vacant private dwellings or 2nd homes: +22,000 (+27%) to 101,000
• Owner-Occupation: +46,000 (+3%) to 1.54 million (although note that the latest estimate for 2020 isn’t directly comparable to results for previous years due to impacts from Covid on the survey estimates used)

Key factors contributing to all these changes include:

• growth in Private Rented Sector, due to financial constraints in the housing market, following the financial crisis in 2007/08, making it more challenging for some households to enter into home ownership. These constraints eased by 2018, which may have contributed to a fall of 22,000 (6%) in the size of private rented sector in 2018. The survey data shows an increase of 25,000 since 2018, but the 2020 data is not directly comparable with previous years.
• at least 31,050 sales of Local Authority and Housing Association Stock (from 2007/08 to 2019/20), with the majority under Right to Buy, alongside other stock losses such as demolitions. These were mostly countered by almost 62,000 new build local authority and housing association homes during the same period.  
• dominance of Private Sector led new building, accounting for 74% of the 236,338 new homes built over this period (2007/08 to 2019/20).

Chart 3 – Percentage of People Satisfied with Their Home by Deprivation (Source: Scottish Government - Scottish Household Survey)

In 2019, 85.0% of households in the 30% most deprived areas were satisfied with their home which was similar to 2018 (84.7%). For Scotland as a whole, 90.1% of households were satisfied with their home, similar to 2018 (90.3%).

Therefore, the gap in satisfaction between Scotland as a whole and the 30% most deprived areas was 5.1 percentage points, similar to the previous year when the gap was 5.6 percentage points. The change in the gap was within 3 percentage points which means that the assessment for this indicator is ‘Performance Maintaining’

Homes that people can afford

Chart 4 – Number of Loans for House Purchases (Source: Financial Conduct Authority)

Following the 2008 financial crisis and ensuing recession, the total number of loans advanced for home purchase fell by more than half (53%) between 2007 and 2009, from 96,489 to 45,134. Lending for home purchase then steadily recovered, with the total number of loans reaching 65,138 in 2019, an annualised growth rate of 3.7% over the period from 2009 to 2019.

The Covid-19 pandemic and associated restrictions on home moves led to a sharp reduction in housing market activity in Q2 2020. However, following the lifting of restrictions on home moves in June 2020, there has been a strong recovery, which limited the annual decrease in 2020 to 14%, and resulted in the total number of loans for home purchase in 2021 (69,779) being 7% above the 2019 (pre-covid) level.

During the housing-market boom years of the early 2000s, home movers constituted a signficant majority of housing market activity, with their share of loans for house purchase standing at 65% in 2007. However, following the 2008 financial crisis, housing-market activity became increasingly balanced between home movers and first-time buyers, and since 2016 the share of loans for home purchase of home movers and first-time buyers has been approximately equal.

Please note the split between first-time buyers and home movers was erroneous in the June 2020 publication and has been corrected.

Chart 5 – Ratio of Housing Costs to Income (median) (Source: Department of Work and Pensions (DWP) – Family Resouces Survey)

This measure of housing affordability shows the median ratio of housing costs to net (unequivalised) household income. The main indicator is on the ‘All Tenures’ aggregate.

Housing costs include rent (gross of housing benefit); council water charges; mortgage interest payments (net of tax relief); structural insurance premiums (for owner occupiers); and service charges.

Over the past 13 years, the ‘All Tenures’ ratio was at its highest between 2006/07 and 2008/09, averaging at 12.4% over this period. Following the drop in 2009/10, the ratio remained very flat, averaging at 9.9% between 2009/10 and 2013/14, after which it dropped to an average of 9.1% between 2014/15 and 2016/17, after which it has fallen further to an average of 7.8% between 2017/18 and 2019/20.

Trends for ‘Owned with a Mortgage’ also follow this general pattern, with a greater reduction from 14.3% in 2007/08 to 9.8% in 2009/10, reflecting falls in mortgage interest rates and reaching 7.0% by 2019/20.

The ratio for ‘Owned Outright’ households has been fairly constant over the past 13 years, within the range of 2.4% and 2.9%

In 2019/20, the ratio for the Private Rented Sector (25.0%) was slightly higher to that for the Social Rented Sector (24.2%). For the Private Rented Sector this ratio was 0.3 percentage points lower than 25.4% in 2006/07, whilst for the Social Rented Sector the ratio is 1.1 percentage points higher than in 2006/07 (23.1%).

Growth of supply

Chart 6 – Supply of New Housing in Scotland (Source: Scottish Government - Housing Statistics for Scotland Supply of new housing annual tables & Housing statistics quarterly update) 

The total supply of new housing fell dramatically after the start of the recession and decreased for 5 years by 12,654 (46%) from 27,594 in 2007-08 to 14,940 in 2012-13.

Total supply then increased in every year until 2019/20, peaking at 23,047. The coronavirus pandemic then led to a sharp fall of 33% to 15,360 in 2020/21. There has been a srong recovery since the pandemic, with total housing supply, excluding conversations, already up to 20,852 in 2021/22, representing an improving performnce for this indicator.

The private led new build sector was most affected by the recession, with a decrease of 11,771 (54%) between 2007-08 and 2012-13. After growing by 6,475 (65%) over 7 years, private housebuilding then fell by 5,344 (33%) in 2020/21, before recovering by 3,188 (29%) in 2021/22..

Over this period, new builds by Housing Associations peaked at 5,576 in 2009-10, then fell 58% to a low of 2,320 in 2015-16, before rising again to 4,204 in 2019/20. In 2020/21, housing association new builds fell 44% to 2,364, before recovering by 1,488 (63%) to reach 3,852 in 2021/22..

New build by Local Authorities generally increased from 28 in 2007-08 to 1,468 in 2019-20, followed by a much smaller decrease of 4% (57) to 2020/21 compared to Private-led and Housing Association completions. There was a large increase in 2021/22 of 92% (1,294), with new build by Local Authorities reaching a 14 year high of 2,705.

The combined number of rehabilitations and conversions averaged 1,149 over the past 14 years, with the numbers in 2016-17 (1,390) and 2017-18 (1,685) well above this average, but the numbers since being below this average, with 562 in 2020/21.

Note: New build and rehabilitation figures for 2021-22 are taken from the latest published Housing statistics quarterly update. The conversions figure for 2021-22 is sourced from separate annual statistics and isn't yet available.

Chart 7 – Effective Housing Land Supply (Source: Local Authority Planning Performance Framework - Annual Reports)

National estimates of Effective Housing Land Supply (EHLS)  have been derived from the Planning Performance Framework (PPF) Annual Reports, published by Local Authorities between 2012 and 2014.

Caution: These estimate should be considered as developmental, as they may not be 100% robust, accurate and consistent in initial years of reporting. 

EHLS is one of the PPF National Headline Indicators (NHIs), defined as:

Realistic picture of available effective land supply which can contribute to the housing requirement and which can be developed within a 5-year period beyond the date of the Housing Land Audit. This land is in the ownership or control of a party which can be expected to develop it or release it for development. It is also free from, or there is a solid commitment to resolve any issues around physical constraints, contamination, deficit public funding, marketability and infrastructure. Housing is the sole preferred use of the land in planning terms or factors such as ownership and marketability point to housing as being a realistic option.

These estimates are based on Housing Land Audits conducted by Local Authorities available at that point in time and may have been completed in previous years. This means EHLS estimates for some Local Authorities may be the same across different years.

Latest published national estimates of EHLS show 183,500 housing units as at March’14.

National estimates of EHLS for March’15 to March’21 have on-going data quality issues and may not be published.

Chart 8 – Major Housing Developments, Average Decision Time (weeks) (Source: Scottish Government - Planning Performance Statistics)

Chart 9 - Local Housing Developments, Average Decision Time (weeks) (Source: Scottish Government - Planning Performance Statistics)

Major housing developments relate to those where a planning application is for 50 or more dwellings, or for a site that exceeds 2 hectares in size.

These statistics relate to the average decision time of planning applications or the average life-span of the applications, where external factors affect the overall decision time.

Results are shown for all applications decided in a particular year and for those which were submitted post August 2009, when substantial changes were made to the planning system. These results provide a better reflection of the performance of the current planning system, by excluding a small number of old legacy cases.

The average decision time for major housing developments (post-Aug 2009) remained fairly stable between 2012/13 and 2015/16, ranging between 40.1 and 41.9 weeks. This was followed by an increase to 43.4 weeks in 2016/17 and a sharp decrease to 38.2 weeks in 2017/18 then 35.1 in 2018/19. This then rose to 54.8 weeks in 2020/21, and then falling slightly to 54.3 weeks in 2021/22.

From mid-March 2020, planning application processing was impacted by the COVID-19 Pandemic. Some applications have longer decision times due to this. These impacts should be considered when making comparisons with earlier years. Also, there are typically only a small number of decisions made for major developments each quarter, therefore average decision times are likely to vary greatly.

Local Housing developments are those that have less than 50 dwellings and with a site area that is less than 2 hectares.

For (post-Aug 2009) local housing developments, average decision times decreased from 17.2 weeks in 2012/13 to 12.2 weeks in 2017/18, and then remained similar to stand at 12.4 weeks in 2019/20, before rising each year to 15.7 weeks in 2021/22. These were also impacted by the COVID-19 pandemic from March 2020

Chart 10 – Construction GVA (Source: Scottish Government -  Economy GDP Publication, Second Estimate of GDP)

Construction GVA is made up of the following sectors: housing, infrastructure and other public, private industrial and private commercial sectors. The GVA measure includes both new construction as well as repair and maintenance.

The trends show that that Construction Output was fairly stable between 2007 and 2008, before falling by 14.9% in 2009, as the impact of the recession was felt.

However, unlike new house building trends, construction output then partially recovered, increasing by 8.8% between 2009 and 2011. The Scottish Government Economic Recovery Plan, which accelerated £346 million of Capital Funding contributed to the increase during this period.

Since 2009, construction output has broadly been increasing gradually, up 21.3% by 2017, reflecting a large programme of investment taking place across Scotland. Projects included the Forth Replacement Crossing, two hospitals in Glasgow (Queen Elizabeth University Hospital and the Royal Hospital for Children), the Borders Railway construction and the Schools for the Future building programme. Construction output then fell consistently until 2019, before a dramatic fall of 21.5% in 2020, due to the impacts of the coronavirus pandemic. Output then rose by 15.1% in 2021, and is at level similar to 2009.