The problems with the new standard method (post 2014 baseline fix) are well known
-Following the OANishambles it has no method for handling changes to household formation
-The reconciliation to the national 300k target is a bodge (reference recent select committee report)
-In many fast growing midlands and northern areas it reduces OAN below need (because of its affordability global fudge factor).
I now think I have stumbled across a simple fix:
Step One – For each HMA model demographic change without migration or change to household formation.
Step Two – Forecast not project changes to HH formation and net migration based on a national economic model with balanced HMA level outputs – which forecasts the impact locally of national economic, infrastructure etc. policy.
I dont know if we will ever have national plan like Ireland but step two essentially derives from the kind of regional economic modelling done in Ireland.
It allows senior politicians to say to understand if you take decisions on x,y,z regional investment and any constraints to balancing labour and housing markets what impact this has on migration and household formation. It stops the kind of planning by unfounded 20 year assumptions approach adopted by for example John Prescott who believed housing growth in the South could be reduced over 20 years by investment in the North (instead we had under development of housing and infrastructure in both).
Planning is about tough choices. It is hardest in areas where the imbalence between the housing and labour markets is greatest. The impact of national policy should be explicit in any system of planning.
One thought on “A Simple Fix to the Standard Housing Method – Don’t Project Household Formation – Forecast it”
Or, to put it another way:
Step 1 : model a “nothing changes”* scenario
Step 2: think about what changes would be nice
Step 3: factor in those changes to the model
* apart from people living longer and having babies etc