The First Minister today chaired a meeting between Community Housing Cymru, representatives from the major banks and building societies and the Welsh Assembly Government. The aim of the meeting was to ensure the continuity of private funds into social housing in Wales if the One Wales target of 6,500 affordable homes is to be met by 2011. Andrew Davies, Minister for Finance wias also be in attendance.

Earlier in the year, a number of Housing associations voiced their concerns that the increased price of funds, and lending behaviour in the wake of the credit crunch was threatening their future investment plans, in terms of both social housing and value added activities including regeneration. The One Wales Government have succeeded in greatly increasing the level of public sector investment in social housing in Wales and public investment in 2009/10 has increased by approximately 60 per cent through a combination of actual social housing grant (SHG), the bringing forward of SHG investment from 2010/11 and the provision of £42m of Strategic Capital Investment funding over 2008/09-10/11.

However in the wake of the international financial crisis, access to affordable private finance has been increasingly challenging as the cost of borrowing rises despite massive interest rate cuts.  Pressure on the banking system to rebuild capital has led additional pressure on the costs of finance for social housing providers in Wales so in this context Community Housing Cymru have been working with the Housing Finance Corporation (THFC) to boost European Investment Bank lending in Wales whilst the Principality Building Society and the Welsh Assembly Government have also commissioned research to look at the feasibility of innovation in the form of a Welsh Housing Bond.

Nick Bennett, Chief Executive of Community Housing Cymru said: "The objective of the summit is to ensure the continuity of private funds into social housing in Wales. It’s was announced yesterday that the sector is on target to meet the One Wales objective of 6,500 homes by 2011. This will only be achieved through further investment and if WAG, Community Housing Cymru and the private lenders work together.

The Essex Review of affordable housing in Wales has put a much greater emphasis on collaboration and one specific recommendation related to the potential additional European Investment Bank lending in Wales, all of which would help deliver the One Wales target."

Ian Williams, chair of CHC added: "Another recommendation  of the Essex Review was to explore the creation of a Welsh Housing Bond, something that CHC would welcome provided that it can ensure that we can do more with less at a time when public purse strings have been tightened. The summit is a chance to re-affirm that housing is a priority for WAG, that lenders will continue to make adequate resources available and that associations will continue to do more to meet need."

The First Minister said, "The Welsh Assembly Government has been working hard to combat the impacts of the recession on the social housing environment, and levels of public sector investment in social housing have seen a marked increased. Investment in 2009/10 has increased by approximately 60% this year.

This increased level of public sector investment in social housing is also helping the Welsh Assembly Government meet the One Wales target of an additional 6,500 affordable homes across Wales. Today’s summit comes at a time when the policies governing social housing provision in Wales are currently under reform. The aims of the proposed changes to the sector will equip the social housing environment with a system of governance and financial regulation that will aid against future financial challenges."

Peter Hughes, Head of Commercial Lending for the Principality welcomed the meeting and confirmed the commitment and engagement of lenders in the challenge to lever in private sector funding to support the One Wales objective. He added: "The Principality have played a very full part in all of the current initiatives pre and post Essex. Despite however the very testing market conditions there have been some notable successes - witness the funding of the stock transfers at Newport and Merthyr, both in the very teeth of the credit crunch.

This demonstrated that "where there was a will there was a way". Although higher funding costs pose some challenges for Housing Associations the overall cost of credit has broadly remained unchanged in the current low interest rate environment and it is the availability of credit rather than its cost  which is the key. In this respect whilst credit remains in short supply as banks rebuild their balance sheets there are some signs that conditions are thawing slightly, particularly to this sector - with sentiment improving and competition re-emerging.