Right homes in the right places: a data-led solution to the UK’s housing crisis
Tolga Necar, Principal Consultant at CACI
First published on BE News on July 19 2023
In the last five years, approximately 1.2 million new homes have been delivered, 300,000 fewer than were deemed necessary in that time. The challenge now should be to better understand how we build the right homes in the right places. Follow the data, follow the demand.
The shortfall in housing supply is spoken about a lot, but not a huge amount of direction is given to the where, what and who. Start with the where. There has, for a long time, been a distinct disparity between parts of the UK in terms of delivery – Welsh and Scottish growth rates for example lag behind those in the English regions. Our Acorn data also shows that the bulk of development has typically been more concentrated in affluent neighbourhoods, areas that won’t appeal or be accessible to the majority of first time buyers.
The way forward is about more than just meeting demand, it is about building the right homes in the right places. To achieve that, we have to be more forensic about our understanding of demand.
Bespoke approach needed
The number of homes the country actually needs is so much more nuanced than a headline grabber with lots of zeroes, and requires a bespoke approach within different regions, and sometimes at an even more granular level than that. We want to empower housebuilders by providing the tools to make a compelling and considered argument for why a particular development is required, based on a clearly identifiable demand.
Demand should be an indisputable part of the equation, answering the question: if this development is built, will it be fully occupied? Ultimately, that’s all that matters: providing homes that people will live in.
We want to arm developers with clarity – a complete picture of what surrounds a particular development site, and what they need to deliver to serve its future inhabitants. There are complex calculations at play here, and while I’m not in the game of giving away trade secrets, there are a few key elements I can talk about.
Build nearby
It all starts with local people. The vast majority only move short distances when relocating home, typically less than two miles, so if a developer wants to know who will live in the homes they plan to build, the answer is usually nearby. There will of course be regional variances – the more rural the location, the larger the sphere of influence – but this is something we account for when looking at a particular site.
Next up is a deep dive into who these people are. My word count limit prevents detailing just how vast our data is in this regard, but using our consumer base, Ocean, we can access an understanding of society that cannot be matched at anywhere near the same scale, via millions of records, describing people against more than 500 individual characteristics. It’s an incredibly rich dataset and, simply put, allows CACI to calculate just how likely someone is to move house and the type of home they would be looking to move into.
Understand demand
That’s achieved through affordability and suitability considerations, and this is where we can help developers in a more bespoke way. All schemes up and down the country, large or small, ultimately want to create a community, and that can only happen if the right types of homes are built. It takes us back to the question: will this development be fully occupied? Yes it will, if you understand demand and can tailor the plans accordingly.
There’s no point in filling a site with three-bed family houses for sale if there is evidenced demand for predominantly one-bed rental flats, or if local people simply don’t have the cash or equity to afford large homes. Having that picture at the outset is critical to financial viability and creating a scheme that truly delivers for its local community.
So you’ve found a great site, you understand the local people, and have a perfectly optimised plan for a mix of housing types and tenures. All set? Well, not quite. Don’t for one second assume that if you ‘build it, they will come’. New communities have an identity that extends beyond new bricks and mortar; it’s also crucial to understand what will motivate them to move.
The rational ‘I need to upsize’ or ‘I want to move out of my parents’ house’ must be matched by ‘and that area will have all the facilities I need and want’. We’ve seen over the past few years how much people value where they live, with some areas seeing the return of the 15-minute community, and that only puts more pressure on those responsible for placemaking in more residential areas.
Deliver approximate amenity
New schemes must deliver appropriate amenity. Don’t make assumptions about what new residents might want. Understanding who would be in the market for your new development will provide enlightening information about what they’re after, whether it’s a new school for their kids, a healthcare facility, a skate park or flexible offices. Not every development is going to be big enough to deliver amenity en masse, so when your space and finances are limited, knowing what your future residents want prevents guessing and assumptions that can eat into time and budgets.
This is all meaningless, though, if this isn’t communicated to the right people. The final stage is ensuring your future residents are being effectively engaged and know that your development is being shaped by what they need.
That, from start to finish, is how housing developers can tackle a more challenging market effectively by using objectively assessed demand. With supply targets falling away, it is time for demand-led development to finally come into its own.