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Last edited 03 Jan 2021
Strategic housing market assessments
Local planning authorities are required to produce a strategic housing market assessment (SHMA) under the National Planning Policy Framework (NPPF). This should assess the full housing needs within the area and the future scale and mix of housing requirements.
The assessment is part of the first stage in the development of a Local Plan for an area. Local plans set out a framework for the future development of an area on a 15-year horizon. They define; the priorities for an area, strategic policies, the framework for neighbourhood plans, land allocations, infrastructure requirements, housing needs, requirements for safeguarding the environment, measures for adapting to climate change and so on.
The primary objective of the strategic housing market assessment is to:
- Identify the forthcoming housing requirements including types, sizes and tenures.
- Identify the area of land required for development.
- Give a breakdown of the land requirements in terms of location and quality.
The general housing market area should be assessed and by doing so, this may identify other smaller areas which have specific features or require further, more detailed assessment to allow an accurate picture of local need to be identified.
A housing market area is considered to be the geographical area that is set out by the housing demand and preferred housing types. Housing market areas may overlap. It is possible to define the areas using the following information:
- House prices and rates of change in price. This analysis results in a ‘market-based’ picture of a housing market area boundary. It clearly identifies the variety of price levels and provides information about the area.
- Housing migration data and search patterns. By undertaking this analysis, areas can be identified within which there a high percentage of household moves.
- Contextual data. This may include data on ‘travel-to-work’ areas or retail or school catchment areas.
- Office for National Statistics.
- House Price Index.
- Department for Communities and Local Government Statistics.
- NHS registration data.
In order to estimate the overall housing need, the projections published by the Department for Communities and Local Government can be used. The projections may require some local adjustments to reflect local conditions. In addition, other market indicators should be considered including land prices, house prices, affordability, development rates, overcrowding and rents.
The assessment should be undertaken approximately every five years with regular updates to take account of short-term changes.
NB The London Plan, published by the Mayor of London in March 2016, suggests that a Strategic Housing Market Assessment (SHMA) is: ‘An assessment of housing need and demand which informs the London Plan and borough local development documents as set out in Planning Policy Statement 3: Housing (PPS3).’
 Related articles on Designing Buildings Wiki.
- Authority monitoring report.
- Community plan.
- Core strategy.
- Development management.
- Development plan documents.
- Development plan.
- Farrell Review.
- Local development framework.
- Local development scheme.
- Local plan.
- Planning authorities.
- Planning permission.
- Statement of community involvement.
- Strategic Housing Land Availability Assessment.
- Supplementary planning documents.
- Test of soundness.
- What is a housing start?
 External references
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