Affordable Housing: Navigating Market Uncertainties and Building Futures

By Tim West · 24 January 2024

Having recently started as a Development Director at ARK, it has certainly been an interesting beginning to my tenure. Firstly, I have to say what a warm, welcoming and immensely capable team I have joined. The level of experience and expertise demonstrated within my first few weeks by the various directors, associates and staff members that I have met has been both inspiring and impressive, thoroughly reinforcing the view that I had of the organisation as an outsider. Particularly striking has been the wide range of work undertaken by the team, but all with an underlying focus on affordable housing be it within a development, asset, repairs or management sphere.

Market Challenges in Affordable Housing

The operating environment, certainly from a development perspective, remains unclear and complex. The continuing collapse of contractors and developers with Stuart Milne being latest in a long line, conflicting reports on the strength of the house sales market, PLCs laying off staff and bulk selling unsold units to RPs and pension funds, and the lack of reduction in build costs demonstrate the level of uncertainty translating into a subdued development market.

Having spoken to a number of contractors, it is apparent that the conflict in the Gulf and attacks on commercial shipping going through the Red Sea is starting to have an impact on building material costs. The result of either having to take goods through a 6,000 additional nautical miles journey to avoid moving goods from the Far East to Europe through the Gulf area or face increases of 700% in insurance premiums to keep using the Red Sea shipping lanes means that it’s inevitable that the cost of imported materials will increase and this, in turn, will hurt build costs.

Overcoming Affordable Housing Obstacles

There has been a robustness to many of our client’s build programmes, where the determination to deliver much needed affordable housing has transcended market pressures. The need for affordable housing has not reduced but the sector’s ability to deliver whilst facing fire safety and decarbonisation of our existing stock and uncertainty in the medium term including the costs of borrowing present a compound challenge. I have noted in my discussions with clients that many are using this period to get their internal processes, policies and procedures reviewed.

ARK’s Expertise in Management and Policy

We are in an amazing position already working with many clients in interim and project management, policy, strategy, and corporate review capacities and have a fantastic complement of consultants available to help deliver this work and far more. My colleagues and I are happy to discuss potential working arrangements with any interested parties at their convenience.