Housebuilders struggle to sell

THE desperation of housebuilders to shifts stock in a slow market has reached a new high, with some knocking 15% off the price of a property to secure a sale.

Developers are increasingly using incentives like contributions towards deposits, stamp duty and legal fees, free gifts or furnished property since the market started to slow at the beginning of last year.

But with mortgage agreements plummeting and demand for property stifled, sellers are resorting to more extreme methods to move unsold stock. Last week, the Council of Mortgage Lenders said the number of loans approved in January were down by a quarter on the same month in 2004.

Miles Shipside, commercial director of property website Rightmove, said: 'There have always been incentives to buy but these have become more serious in recent months. I know of some developers offering 15% off the asking price. It's not advertised as such, more offered when people enquire about property.'

George Wimpey is knocking £30,000 off certain properties if the sale is completed within six weeks. A four-bedroom home on the market for £279,995 in Worcestershire is being touted to first-time buyers for £249,995, taking it below the 3% stamp duty threshold. The company, which announced pre-tax profits of £450.7m yesterday, will also help with legal and valuation fees, carpet the property and install a dishwasher free of charge on the property.

On another property in the same Droitwich development, the company is knocking £15,000 off the price to £305,000 and paying the £9.150 stamp duty.

A Wimpey spokeswoman said the company was offered discounts on a 'small number' of properties that were proving difficult to sell.

Shipside said the swingeing cuts could start to drag on the rest of the property market, forcing people trying to sell their house to drop their price to compete. 'The new-build market does tend to be a barometer of the rest of the market so sellers may be forced to drop their prices.'

Developers are also trialling schemes where the buyer only pays a proportion of the value upfront and settles the remainder when the property is sold.

Bellway Homes allows buyers to pay just 75% of the property's market value on homes up to £210,000, while Linden Homes initially charges just 80% of the deal. The scheme is a risk because the buyer will pay the remaining proportion based on the market value of the property when it is sold. Therefore, if a property doubles in price to £200,000, the owner would pay £50,000 to Bellways, rather than £25,000.

Bellway is also offering buyers at its Meridian South development in South East London £700 a month in cash for two years if they purchase a property at asking price. The offer is on selected plots and is capped at £16,800.

Another popular method of attracting cautious buyers is by subsiding mortgages. Fairview, which owns Rialto Homes, if offering subsidies of up to £1,000 a month for up to 12 months, while Wimpey is offering 2.99% on select mortgages for two years on select properties.