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Slowdown fears for affordable home building

The credit crunch could trigger a slowdown in the affordable housing sector with housing associations forced into mergers and consolidation in order to ride out the storm according to a Housing Corporation survey.

In April the affordable housing funding body surveyed 100 of the UK’s largest affordable housing developers to seek their views on the state of the market and funding for their projects.

While the corporation claims that most associations are well set to weather any downturn, the amount of private finance and shared ownership sales associated with some of them could leave them exposed.

The report on the survey said: “It is our view that this will not lead to failure or insolvency but could result in some restructuring in the market leading to new mergers, consolidations and/or, we could see a slow down in development activity until the housing market achieves stability”.

It says that the immediate concern for most associations is the performance of the housing market, rather than a lack of available finance due to the credit squeeze, although it recognises that the number of funders in the market place is falling.

The average housing association has facilities to cover funding for the next two years, based on current projections, with only £700 million of an anticipated total £4.7 billion spend on affordable housing in the next year still to be arranged with lenders.