Reducing Housing Supply Increases Cost by 100% in English Cities – A Case Study

In Northern Core Cities you can often undertake a matched pair analysis of the impact of different planning policies on housing supply and cost.

Take Sheffield and Manchester. Both great university cities (Sheffield 2, Manchester 5) Sheffield around 48,000 students living in city (and not living at home), Manchester something like 99,000. Both areas have districts which are very much ‘student ghettos’ in the South of the City (historically large Victorian Middle Class Homes), Manchester Fallowfield and Withington , Sheffield, Eccesall Road and Broomhall, both have quarters where the only shops and restaurants serve Chinese student populations. But in terms of purpose built student accommodation they couldn’t be more different. Central Sheffield has seen 22,000 purpose built student rooms built in the decade prior to 2019, and looking out of my window there must be 4-5,000 more under construction. Manchester by contrast, despite having one of the highest student populations in Europe, and one of the highest development rates for high density general needs housing, has a historically very restrictive core strategy policy H12, it has also restricted student housing in the University of Manchester Oxford Road corridor, until very recently, to maximise space for university expansion. Manchester City centre has seen around 1,800 purpose built units in the City Centre and over 1,000 net additions in redevelopment of a purpose built complex in Fallowfield. Since a shift in stance since 2018 more purpose built units are comping on stream in the Oxford Road corridor (over 5,000 units consented) though few are yet completed.

The reasons for the difference in policy relates to the collapse in demand for student accommodation after the global financial crisis and worries that rising tuition fees after 2010 would lead to an oversupply of student accommodation. This didn’t happen as an influx of Chinese students buoyed demand with a strong cultural preference for purpose built city centre high density apartments. Sheffield though never updated its local plan (the CIty centre plan) due to conflicts with its pro development lead cllr which we have covered on here before. Arguably the policy was too lax, too little non student housing in and around Sheffield City centre. In Manchester there was also concern aboutr loss of Council tax revenue. Though it has to be understood that purpose built to rent general housing goes over to wealthier students when there is a shortfall in supply. So overall Sheffield has built around twice the purpose built stident units despite having half the number of students.

Manchester now admits

Manchester is one of the most expensive cities in the UK for PBSA. A more diverse pipeline of new PBSA is now
needed to help stabilise rental growth. It is critical to ensure there is a residential market, which meets the needs of students at an affordable price.

And is reviewing policy H12.

Of course if you restrict students units wealthier students will take over the general housing stock and less wealth students overcrowd. If you allow them then former overcrowded ‘student gehttos’ will return to family and professional stock (what is termed filtering), as we have seen in South Manchester and far more so in South Sheffield. This has a transformational effect on student living conditions. For this reason I see little policy justification on restricting student housing by need. Let the market decide, its just housing, and ensure a real mix by localised policies according to the property mix in individual communities. There is also a case for ensuring that university expansion is matched by policies on linked student housing and staff expansion – as successfully shown in Cambridge and seriously lacking in Oxford.

The biggest difference between Manchester and Sheffield is rents. Sheffield where I live it is around 85 PPPW (Inc bills) throughout the city. In Manchester according toi UNIHOMES it is around 175 PPPW (inc Bills) with radical variations throughout the city with premium sites around Oxford Road attracting 100-400/month more.

This perfectly controlled experiment (after all incomes of students are the same) puts the lie that housing cost is inelastic to supply and is really driven by finance etc. If you build twice the numbers of units per head of population rents are halved.

2 thoughts on “Reducing Housing Supply Increases Cost by 100% in English Cities – A Case Study

  1. On the specific matter of student accommodation, market provision may be the way to go. Unfortunately, I’ve had some difficult conversations with architects over 3-year old, 10-storey student accommodation blocks that were never occupied above the 3rd floor, the demand never having materialised. The units were built as 24 sq.m. self contained units, craned in one-by-one. The sensible approach would be to join 2 units together to make 1 / 2-person flats. No architect or engineer could be found to work out and sign off what would be needed to allow the necessary service holes and doorways to be punched through walls. These conversations took place 2 years before Grenfell… and these units, and others, are still empty.

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