Housing Need and Demand Assessment (HNDA) A Practitioners Guide (2026)
Updated guidance for Housing Need and Demand Assessment, for Practitioners, (2026)
Chapter 2: Key Housing Market Drivers
Section 1 – Introduction Chapter Aim
2.1 How to source and evidence the key demographic and economic drivers of local housing markets.
2.2 To foster an understanding of why and how these data are used to estimate housing need and demand in the HNDA Tool.
2.3 To help inform which future demographic and affordability scenarios are run in the HNDA Tool.
Core Output 1
2.4 For robust and credible status HNDAs must satisfy all core outputs and processes, including Core Output 1:
Key housing market drivers:
- Identifies key factors driving the local housing market and explains what each of them may mean for the future of housing in the area and in terms of what scenarios may be chosen to run in the HNDA Tool,
- including household formation, population and migration, housing affordability including income, house prices, rent levels, access to finance and key drivers of the local and national economy,
- should inform the choice of scenarios run in the HNDA Tool.
- uses time series where possible.
Section 2 – Content and Evidence Contents
2.5 This chapter includes an analysis of demographic, affordability and wider economic trends which are key drivers of local housing markets. Their analysis helps authorities to understand local housing market dynamics and make evidence-based choices for which scenarios to run in the HNDA Tool. Authorities may wish to use economic forecasting or econometric work to underpin this section.
The chapter should begin with a short section describing the local authority housing market and economy to paint a high level picture for reader before the HNDA goes into more detail.
Data Sources
2.6 Some data sources and other notes for this chapter are set out below.
Demographic Trends
(a) Household composition (size, age and type)
- National Records of Scotland (NRS)
- This should also be used to inform Chapter 3 on housing stock
(b) Household Projections (principle and variants)
- National Records of Scotland (NRS)
- (Included in HNDA Tool for calculation)
(c) Net Migration
- National Records of Scotland (NRS)
- This is included in the household projections but should be analysed in the HNDA as well to profile net migration in each authority.
Affordability Trends
(d) House prices (lower quartile and median)
- HNDA Datapack (given to authorities by CHMA)
- (Included in HNDA Tool for calculation)
(e) Volume of sales
(f) House Purchase Affordability Ratios (lower quartile and median)
- HNDA Datapack (given to authorities by CHMA, using income and house prices)
(g) Private Rents
- SG Local Housing Allowance rates
- SG Private Sector Rent Statistics (included in the HNDA Tool)
- ONS Index of Private Rental Prices
(h) Social Rents
- Housing Revenue Account (LA social rents)
- Scottish Housing Regulator (RSL social rents)
- SG Housing Statistics (LA & RSL historic rents)
- Letting or Estate Agent market intelligence
- Local Authority PRS data collections
(i) Social Rent & Private Rent Affordability Ratios
- HNDA Datapack (given to authorities by CHMA using income and average rent)
(j) Gross Household Income
- Scottish Government Local Level Income Estimates (historic)
- Scottish Government Local Level Income Statistics (current - provided in HNDA Tool)
(k) Loan-to-Value mortgage rates
(l) Number of First-Time Buyers
(m) Interest Rates
Economic Trends
(n) Economic Growth (GVA)
(o) Unemployment and Employment
Steps for Drafting the Chapter
2.7 The following steps are suggested:
Step 1 - decide what evidence is required for the HNDA Tool, LHS and LDP and what geography is required
Step 2 - gather evidence and triangulate any local data with national data for quality assurance
Step 3 - tabulate or chart the data and describe the trends i.e. increase, decrease, no change
Step 4 - consider what impact that local demographic, affordability and economic trends may have on the future level of housing need and demand e.g. drive less private demand, drive more affordable need, drive growth of the Private Rented Sector
Step 5 - use the analysis to choose scenarios in the HNDA Tool and write- up these decisions in this chapter
Step 6 - consider what the findings in this chapter mean for LHS and LDP and complete the key issues table (see below)
Step 7 - agree the draft chapter with the HMP
Section 3 – Key Issues and Outputs
Key Issues
2.8 The key issues table below should be included at the end of the chapter.
LHS and LDP: Demographic issues
Key Issues Identified in the HNDA:
1.
2.
3.
LHS and LDP: Affordability issues
Key Issues Identified in the HNDA:
1.
2.
3.
LHS and LDP: Economic issues
Key Issues Identified in the HNDA:
1.
2.
3.
Outputs
2.9 At the end of this process authorities will have:
- met the criteria for Core Output 4
- identified key demographic factors and how these are driving the local housing market(s)
- identified key affordability factors and how these are driving the local housing market(s)
- identified key economic factors and how these are driving the local housing market(s)
- decided what data and scenarios will be used to run the HNDA Tool and summarised these in this chapter.
- decided what key findings may be used for to inform the LDP and LHS and completed the key issues table (as set out above)
2.10 The HMP will have agreed the draft chapter.
Contact
Email: chma@gov.scot