Hertfordshire's economic growth under threat due to homes shortage

The high-end rental market is booming in St Albans and Harpenden. Picture: Getty Images/iStockphoto

Increased housing costs could price many movers out of Hertfordshire. - Credit: Getty Images/iStockphoto

A shortage of new housing is putting Hertfordshire's economic growth at risk, according to new research.

Savills say 40,000 new homes need to be built across the county over the next five years, according to the government’s standard method for calculating housing need. However, currently only Hertsmere and East Hertfordshire are delivering new housing at a faster rate than the England average.

In a new report into development within the county, Savills labels Herts an "emerging powerhouse" due to its position in the "innovation corridor" between London and Cambridge.

It dubs this area the "fastest growing region in the UK", but says growth in housing costs could price too many people out, making employers unable to attract their required workforce. 

Prices across Herts have increased by an average of 57 per cent since the global financial crisis, compared to the East of England average of 45 per cent. St Albans has seen the highest growth of 63 per cent.

Stevenage is the only local authority in Herts where the average house price is below the East of England and national average, while St Albans, Three Rivers and Hertsmere all have an average house price of over £600,000.

Justin Bates, a director within the Savills development team with responsibility for Hertfordshire, said: “The county has a thriving economy driven by the life sciences and film and television industries and is at the centre of one of the fastest growing regions in the UK – but a lack of new housing is threatening continued growth.

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“A historic delivery shortfall has resulted in one of the greatest affordability pressures in the country. Only Stevenage has an income to house price ratio below the England average.

"In St Albans and Three Rivers, median house prices are over 16 times median incomes, among the highest of any local authorities outside London. This could seriously hinder economic growth as it will prevent employers from attracting the workforce needed to deliver the area’s potential."

Justin added: “There remains a pressing need to identify sites to build affordable homes. Investment in infrastructure will be crucial to unlocking development, but the county will also require a greater contribution from all of its local authorities.

“Our analysis suggests that six authorities – North Hertfordshire, St Albans, Three Rivers, Welwyn Hatfield, Hertsmere and Dacorum – have not identified enough land for development to meet need. A number of authorities also don’t have an up to date Local Plan in place."

If Hertfordshire is to meet its economic potential, local authorities will need to be more proactive in identifying new sites for development, Justin said. "The new homes market across Hertfordshire is typically smaller than the national average, so there is  considerable scope for it to increase – especially given the weight of demand for housing across the county.”