Development plan · Westmeath County Council
Westmeath County Development Plan 2021–2027
The council's development plan written statement: its strategy, policies, objectives and development standards.
Westmeath County Council · 2021–2027 · 634 pages
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- Appendix 1 Housing Strategy xv Westmeath County Development Plan 2021-2027 3.7 Determination of Distribution of Additional Households Purpose: This is the calculation of estimated distribution of additional anticipated household units for each of the 10 household deciles throughout the plan period. This has been based on the outputs of Step 2 (Determination of Average Household Size and Additional Households Required) in relation to number of anticipated households per year during the plan period as well as the distribution of housing units in the State from the Household Budget Survey9. Table 14 identifies the distribution of additional households across each of the ten deciles that are anticipated during the plan period. Table 14: Determination of Distribution of Additional Households per decile Range % Households 2021 2022 2023 2024 2025 2026 2027 1st Decile 9.83% 68 69 69 70 70 71 72 2nd Decile 10.57% 73 74 75 75 76 76 77 3rd Decile 10.47% 73 73 74 75 75 76 76 4th Decile 10.44% 73 73 74 74 75 76 76 5th Decile 10.25% 71 72 72 73 74 74 75 6th Decile 9.94% 69 70 70 71 71 72 73 7th Decile 9.62% 67 67 68 68 69 70 70 8th Decile 9.65% 67 68 68 69 69 70 70 9th Decile 9.61% 67 67 68 68 69 70 70 10th Decile 9.62% 67 67 68 68 69 70 70 Total 100.00% 695 700 706 712 717 724 729 3.8 Calculation of Projected House Price Bands Purpose: This is the calculation of projected house price bands based on the percentage split of the 8 price bands. This section sets out background information on house price trends in the current market. To ensure the most up to date market context, 2019 has been selected as the baseline year and property transactions during the year have been considered representative to understand house prices and the distribution of housing units per price band. As demonstrated in Table 15, 871 transactions occurred in County Westmeath across the eight price bands during 2019. Table 15: House sales during 201910 Value Distribution (2019) Number of Transactions % of total 0-100,000 104 11.9% 100,000-150,000 283 32.5% 150,000-200,000 224 25.7% 200,000-250,000 138 15.8% 250,000-300,000 64 7.3% 300,000-350,000 21 2.4% 350,000-400,000 17 2.0% 400000+ 20 2.3% 10 Residential Property Price Register (2019) Transactional data for 2019 (to 2 December 2019).
- Appendix 1 Housing Strategy xvi Westmeath County Development Plan 2021-2027 As part of the price assessment and projection for Westmeath, it is important to determine, generally, current house price sales and how they may fluctuate over the plan period. For this reason, historic house prices have been investigated through analysis of the Residential Property Price Register11, CSO12 and Daft data13 in order to contextualise general trends and how they can influence the market. As illustrated in Table 16, the recession and subsequent period of economic growth has resulted in large variances in house prices and in year-on-year growth metrics. Table 16: Historic year-on-year change in house price metrics in County Westmeath Year Annual change in average house sales price 11 Annual change in average house sales price12 Annual change in median house sales price12 Annual change in average house sales price13 2011 -15.6% -15.5% -27.91% -15.5% 2012 -17.3% -17.4% -21.04% -6.2% 2013 -3.9% 12.3% 2.26% -6.6% 2014 0.3% 6.5% 9.78% 6.5% 2015 22.2% 4.6% 4.11% 6.0% 2016 0.3% 15.5% 12.68% 11.3% 2017 22.0% 12.9% 15.00% 12.9% 2018 9.9% 15.1% 31.74% 9.4% Given the context of improving economic conditions and its associated influence on house prices, it is anticipated that the distribution per price band will continue to change during the plan period as demonstrated in Table 17. The distribution of the price of units in the housing market during 2013 – 2018 in County Westmeath has been reviewed. It is assumed that a gradual shift towards the composition more commonly seen during 2006-2008 will arise (i.e. incremental year on year change from the lower price bands towards the higher price bands). Table 17: Projected distribution of houses by house price bands This information has supported the calculation of projected house price bands based on the percentage split of the 8 price bands as outlined in Table 18. This reflects market changes to the end of the plan period including: • Changing distribution of housing units per price band (as outlined in Table 17); and 11 Residential Property Price Register (2019) Data for the period 2010 – 2019 was downloaded on 2 December 2019. 12 CSO (2019) Residential Property Transactions Data – Table HPM02 and HPA02 data for the period 2010 – 2018 was reviewed. 13 Daft Quarterly Reports were downloaded for Q4 during the period 2011 – 2018 whilst Q3 report for 2019 was reviewed Price Band Annual % Change 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 0 -100,000 -0.80% 11.9% 11.1% 10.3% 9.6% 8.8% 8.0% 7.2% 6.4% 5.6% 4.8% 4.0% 3.2% 2.4% 100,000-150,000 -2.17% 32.5% 30.3% 28.2% 26.0% 23.8% 21.7% 19.5% 17.3% 15.2% 13.0% 10.8% 8.7% 6.5% 150,000-200,000 0.86% 25.7% 26.6% 27.4% 28.3% 29.1% 30.0% 30.9% 31.7% 32.6% 33.4% 34.3% 35.1% 36.0% 200,000-250,000 0.53% 15.8% 16.4% 16.9% 17.4% 18.0% 18.5% 19.0% 19.5% 20.1% 20.6% 21.1% 21.7% 22.2% 250,000-300,000 0.24% 7.3% 7.6% 7.8% 8.1% 8.3% 8.6% 8.8% 9.1% 9.3% 9.6% 9.8% 10.0% 10.3% 300,000-350,000 0.44% 2.4% 2.9% 3.3% 3.7% 4.2% 4.6% 5.1% 5.5% 6.0% 6.4% 6.9% 7.3% 7.7% 350,000-400,000 0.44% 2.0% 2.4% 2.8% 3.3% 3.7% 4.2% 4.6% 5.1% 5.5% 5.9% 6.4% 6.8% 7.3% 400,000+ 0.44% 2.3% 2.7% 3.2% 3.6% 4.1% 4.5% 5.0% 5.4% 5.8% 6.3% 6.7% 7.2% 7.6% Projected Distribution by Price Bands
- Appendix 1 Housing Strategy xvii Westmeath County Development Plan 2021-2027 • Annual increase in average house prices of between 7% (in 2020) to 5% (from 2022 onwards). This forecast assumes a slight reduction on existing levels of house price inflation (2014-Q3 2019).
- Appendix 1 Housing Strategy xviii Table 18: Calculation of Projected House Price Bands Year Average Price Increase 1st Band (Below X1) 2nd Band (X1 – X2) 3rd Band (X2 – X3) 4th Band (X3 – X4) 5th Band (X4 – X5) 6th Band (X5 – X6) 7th Band (X6 – X7) 8th Band (Above X7) 2019 8.0% 100,000 100,001 150,000 150,001 200,000 200,001 250,000 250,001 300,000 300,001 350,000 350,001 400,000 400,001 2020 7.0% 107,000 107,001 160,500 160,501 214,000 214,001 267,500 267,501 321,000 321,001 374,500 374,501 428,000 428,001 2021 6.0% 113,420 113,421 170,130 170,131 226,840 226,841 283,550 283,551 340,260 340,261 396,970 396,971 453,680 453,681 2022 5.0% 119,091 119,092 178,637 178,638 238,182 238,183 297,728 297,729 357,273 357,274 416,819 416,820 476,364 476,365 2023 5.0% 125,046 125,047 187,568 187,570 250,091 250,092 312,614 312,615 375,137 375,138 437,659 437,661 500,182 500,183 2024 5.0% 131,298 131,299 196,947 196,948 262,596 262,597 328,245 328,246 393,893 393,895 459,542 459,544 525,191 525,193 2025 5.0% 137,863 137,864 206,794 206,795 275,725 275,727 344,657 344,658 413,588 413,590 482,520 482,521 551,451 551,452 2026 5.0% 144,756 144,757 217,134 217,135 289,512 289,513 361,890 361,891 434,268 434,269 506,645 506,647 579,023 579,025 2027 5.0% 151,994 151,995 227,990 227,992 303,987 303,989 379,984 379,986 455,981 455,982 531,978 531,979 607,975 607,976
- Appendix 1 Housing Strategy xix 3.9 Calculation of Mortgage Capacity of Households Purpose: This is the determination as to whether households in each decile can qualify for a mortgage (under the current Central Bank rules) that enables them to purchase a house in the lowest price band. The Central Bank have measures in place that set limits on size of mortgages that consumers can borrow through the use of loan-to-value (LTV)14 and loan-to-income (LTI)15 limits. This approach therefore establishes whether households could qualify for a mortgage that would enable them to purchase a house in the lowest price band under these rules. The key variables used to determine whether households in a decile can qualify for a mortgage are therefore a LTV ratio of 0.90, a maximum LTI ratio of 3.5 and the upper value of the first house price band for that year. As outlined in Table 19, it has determined that during the plan period, the first three deciles do not have sufficient income to meet the Central Bank rules to as 3.5 times their gross income is less than 90% of the value of purchase a house in the lowest projected price band and hence they do not qualify for a mortgage and progress to private rental (See Step 11). Those households that can qualify for a mortgage progress to the needs assessment for ownership (See Step 10). 14 The LTV limit requires you to have a minimum deposit before you can get a mortgage. First-time buyers are allowed up to 90% LTV, meaning they're required to provide a minimum deposit of 10% upfront for any property. 15 The LTI limit restricts the amount of money you can borrow to a maximum of 3.5 times your gross income.
- Appendix 1 Housing Strategy xx Table 19: Determination of Mortgage Qualification for Households Year Range Additional Anticipated Households Upper Value of Cheapest House Price Band Minimum LTV (90% of Cheapest House Price) Maximum LTI (3.5 LTI) Mortgage Qualification Additional Anticipated Households That Qualify for a Mortgage Additional Anticipated Households That Do Not Qualify for a Mortgage 2021 1st Decile 68 113,420 102,078 37,441 FAIL 0 68 2nd Decile 73 62,635 FAIL 0 73 3rd Decile 73 90,861 FAIL 0 73 4th Decile 73 118,898 PASS 73 0 5th Decile 71 151,128 PASS 71 0 6th Decile 69 186,849 PASS 69 0 7th Decile 67 228,257 PASS 67 0 8th Decile 67 278,344 PASS 67 0 9th Decile 67 355,007 PASS 67 0 10th Decile 67 581,715 PASS 67 0 695 480 214 2022 1st Decile 69 119,091 107,182 38,526 FAIL 0 69 2nd Decile 74 64,451 FAIL 0 74 3rd Decile 73 93,496 FAIL 0 73 4th Decile 73 122,346 PASS 73 0 5th Decile 72 155,511 PASS 72 0 6th Decile 70 192,268 PASS 70 0 7th Decile 67 234,877 PASS 67 0 8th Decile 68 286,416 PASS 68 0 9th Decile 67 365,303 PASS 67 0
- Appendix 1 Housing Strategy xxi Westmeath County Development Plan 2021-2027 10th Decile 67 598,585 PASS 67 0 700 484 216 2023 1st Decile 69 125,046 112,541 39,644 FAIL 0 69 2nd Decile 75 66,320 FAIL 0 75 3rd Decile 74 96,207 FAIL 0 74 4th Decile 74 125,895 PASS 74 0 5th Decile 72 160,020 PASS 72 0 6th Decile 70 197,844 PASS 70 0 7th Decile 68 241,688 PASS 68 0 8th Decile 68 294,722 PASS 68 0 9th Decile 68 375,896 PASS 68 0 10th Decile 68 615,944 PASS 68 0 706 488 218 2024 1st Decile 70 131,298 118,168 40,793 FAIL 0 70 2nd Decile 75 68,244 FAIL 0 75 3rd Decile 75 98,997 FAIL 0 75 4th Decile 74 129,545 PASS 74 0 5th Decile 73 164,661 PASS 73 0 6th Decile 71 203,581 PASS 71 0 7th Decile 68 248,697 PASS 68 0 8th Decile 69 303,269 PASS 69 0 9th Decile 68 386,797 PASS 68 0 10th Decile 68 633,806 PASS 68 0 712 492 220 2025 1st Decile 70 137,863 124,076 41,976 FAIL 0 70
- Appendix 1 Housing Strategy xxii Westmeath County Development Plan 2021-2027 2nd Decile 76 70,223 FAIL 0 76 3rd Decile 75 101,868 FAIL 0 75 4th Decile 75 133,302 PASS 75 0 5th Decile 74 169,436 PASS 74 0 6th Decile 71 209,485 PASS 71 0 7th Decile 69 255,910 PASS 69 0 8th Decile 69 312,064 PASS 69 0 9th Decile 69 398,014 PASS 69 0 10th Decile 69 652,187 PASS 69 0 717 496 221 2026 1st Decile 71 144,756 130,280 43,194 FAIL 0 71 2nd Decile 76 72,259 FAIL 0 76 3rd Decile 76 104,822 FAIL 0 76 4th Decile 76 137,168 PASS 76 0 5th Decile 74 174,350 PASS 74 0 6th Decile 72 215,560 PASS 72 0 7th Decile 70 263,331 PASS 70 0 8th Decile 70 321,114 PASS 70 0 9th Decile 70 409,557 PASS 70 0 10th Decile 70 671,100 PASS 70 0 724 500 223 2027 1st Decile 72 151,994 136,794 44,446 FAIL 0 72 2nd Decile 77 74,355 FAIL 0 77 3rd Decile 76 107,862 FAIL 0 76 4th Decile 76 141,146 PASS 76 0
- Appendix 1 Housing Strategy xxiii Westmeath County Development Plan 2021-2027 5th Decile 75 179,406 PASS 75 0 6th Decile 73 221,811 PASS 73 0 7th Decile 70 270,968 PASS 70 0 8th Decile 70 330,426 PASS 70 0 9th Decile 70 421,434 PASS 70 0 10th Decile 70 690,562 PASS 70 0 729 504 225
- Appendix 1 Housing Strategy xxiv 3.10 Calculation of Projected Needs for Ownership 3.10.1 Application and Variables of the Annuity Formula Purpose: This is the calculation of the approximate affordable house price for each of the ten deciles per year during the plan period based on the application of the annuity formula. The projections for household income during the plan period are applied to the DoECLG Model Housing Strategy annuity formula. This formula determines the maximum affordable house price for each of the ten income deciles based on a number of evidence-based variables that have been established through analysis of historic mortgage data from the Central Bank16. The key variables used in the annuity formula include an affordability threshold of a maximum of 35% expenditure of household income on mortgage costs, a loan to value ratio of 0.90, an annual interest rate (APR) of 3%, and a loan term of 29 years. It should be noted, that whilst some of the lower deciles have a maximum affordable house price that is higher that the lowest price band for that year, as outlined in the preceding step, these households would not qualify for a mortgage due to the current Central Bank rules. Table 20: Calculation of Housing Affordability Range % Households 2021 2022 2023 2024 2025 2026 2027 1st Decile 9.83% 83,342 85,759 88,246 90,806 93,439 96,149 98,937 2nd Decile 10.57% 137,854 141,852 145,966 150,199 154,555 159,037 163,649 3rd Decile 10.47% 198,060 203,804 209,714 215,796 222,054 228,494 235,120 4th Decile 10.44% 252,381 259,700 267,232 274,981 282,956 291,161 299,605 5th Decile 10.25% 308,841 317,797 327,014 336,497 346,255 356,297 366,629 6th Decile 9.94% 368,036 378,709 389,691 400,992 412,621 424,587 436,900 7th Decile 9.62% 434,322 446,917 459,878 473,214 486,937 501,058 515,589 8th Decile 9.65% 511,361 526,190 541,450 557,152 573,309 589,935 607,043 9th Decile 9.61% 616,515 634,394 652,792 671,723 691,203 711,248 731,874 10th Decile 9.62% 927,807 954,713 982,400 1,010,89 0 1,040,20 5 1,070,37 1 1,101,41 2 3.10.2 Calculation of Projected Needs for Home Ownership Purpose: This is the calculation of the households surplus and/or deficit per price band with respect to the number of households that can qualify for a mortgage. Based on the determination of additional households required (i.e. outputs from Step 7 – Refer to Table 9 and Table 17), the projected house price bands (i.e. outputs from Step 8 – Refer to Table 18), the determination of households that can qualify for a mortgage (Refer to Table 19) and the calculation of housing affordability (i.e. outputs from Step 9 – Refer to Table 20), the housing surplus/deficit per price band has been determined as set out in Table 21. A surplus in a given price band has been identified where the number of housing units anticipated is greater than the number of households that qualify for a mortgage and have the ability to purchase a home at the upper value of that house price band. A deficit has been identified in a given price band where there is a fewer
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