"Government figures show new households are forming at a rate of around 245,000 a year"
Interesting statistic. Let's look at that statement in some more depth.
According to the latest DCLG household projections:
"The projected growth in the population is the main driver of the increase in households, accounting for nearly three quarters of the increase in England between 2008 and 2033. This reflects impacts of fertility, life expectancy and net migration in the population projections."
The change in the fertility rate is predominantly due to having an increasing proportion of the population of child-bearing age comprising immigrant women. This is why in 2010 25.1% of all births in England and Wales were to women who were not born in the UK.
However, the impact of immigrants on the birth rate is understated in the ONS population projections because they use the UK average fertility rate rather than the actual fertility rate of the immigrants themselves to project the number of births to that sector of the newly arrived population. This underestimates the population growth due to births to immigrants by around a factor of two.
In numerical terms and in terms of the impact on current housing demand, however, the number of births is a minor factor compared to the number of immigrating adults, all of whom have an immediate need for independent housing (unlike new-born babies who live with their parents).
Increasing life expectancy does NOT create any additional households or housing demand, it simply means that the existing households live longer.
The only factors that increase the number of households are new household formation from within the current population (e.g. young adults becoming independent) and immigration.
Over the past fifteen years the increase in the population has been in the ratio 4:1 immigration to natural growth. Not only does this make immigration the single biggest factor in rising housing demand, it has an immediate impact.
The effect of natural population growth has a delayed impact because these newly born UK residents will take twenty years or so before they add to the number of independent households requiring housing.
Interestingly the latest DCLG household projections were based on the 2008-based ONS population projections. Those ONS projections included a DOWNWARD adjustment in the net migration figures from the previous estimates, from 190,000 a year to 180,000 a year.
The ACTUAL net migration figures have been considerably higher than that, reaching a peak of 255,000 in YE Sept 2010 and currently running at 250,000 in the latest figures for YE June 2011.
So, not only do the DCLG projections understate the impact of immigration on housing demand, they are based on completely unrealistic estimates of the level of long-term migration into the UK.