Home builders in London sweeten the pot for buyers
Developers are offering big financial incentives to stimulate interest in the city's stagnant suburban housing market
Prices for new homes in London are falling and developers are offering buyers cash to tempt them back into the market.
According to property portal SmartNewHomes.com, new home prices fell 4.6 per cent in London in the 12 months to October 2005.
Developers, desperate for year-end sales, are offering big financial incentives.
Fairview New Homes promises buyers GBP7,000 ($93,115) cash if they buy flats at four of its London projects. It will also pay the 5 per cent deposit.
At The Grove, a project built by Stagnell Fox in Stoke Newington in north London, buyers can take advantage of a deferred equity scheme that allows them to pay only 75 per cent of the cost of the property on purchase and the remaining 25 per cent when they sell.
Builders such as Bellway, Laing and George Wimpey are offering to pay various purchase costs for buyers, including legal fees, mortgage fees and stamp duty. Having fitted carpets installed and the 5 per cent deposit paid are other options.
Most incentives are offered on suburban projects.
Robert Hadfield, managing director of investment property management company Pineflat, said: 'The facts and figures speak for themselves in that developers only offer incentives if sales are slow.
'They might be trying to bring sales forward, or overcome some seasonal imbalance, but ultimately they are trying to boost demand.
'Subjectively, I feel that the froth has gone out of the market and developers are clearly having to fight harder for sales.
'Prices have risen to the point where new buyers, occupational or investor, cannot afford to buy,' Mr Hadfield said.
He said there was no sign of an upturn, because new homes were streaming on to the sales market. Unless there was a significant increase in demand, prices were likely to keep falling or go flat.
Adrian Owen, London residential developments director at estate agency Hamptons International, said: 'This year has not been a great year, to be honest. The market in London has been flat for the past couple of years.'
However, he said a turnaround in the dull market was under way. His company recorded a 30 per cent increase in reservations for new homes in October, compared with the same month last year.
Hamptons and property consultancy CB Richard Ellis forecast that prices would rise 8 per cent for new London property next year and 8 per cent in 2007.
