Developers Offer Incentives to Keep Home Prices High
The Housing Market Game: How Developers Are Keeping Prices Up With Mortgages, Cash, and Cars on the Table
The housing market can be a tough nut to crack, especially for aspiring homeowners. As demand for homes continues to surge, developers are exploring new avenues to keep their prices high. In this blog post, we’ll delve into the strategies they’re employing, including paying buyers’ mortgages, offering cash incentives, and even throwing in a Tesla. Let’s explore how these incentives are changing the landscape of the real estate market.
Paying Mortgages to Maintain Prices
One intriguing approach that developers are taking to resist price reductions involves paying buyers’ mortgages. Fairview New Homes, for instance, is offering cash sums of up to £30,000, which equate to a mortgage rate discount of 2.5% for two years. The idea is simple: help buyers cover their mortgage costs while keeping home prices at their current levels.
Cash, Cars, and Holidays: Unique Buyer Incentives
Fairview New Homes isn’t just stopping at mortgage discounts. They’re giving buyers the option to utilize their savings for various purposes. This includes buying a new car, covering groceries for up to two years, or enjoying a well-deserved holiday. These creative incentives are designed to sweeten the deal for potential homeowners.
Buddy Up Scheme: Extra Perks for Buyers
As part of their strategy, Fairview New Homes also launched the “Buddy Up” scheme. Under this program, buyers can enjoy £2,000 for legal fees and advice, along with a choice between a 5% deposit boost and a £5,000 John Lewis voucher or a Stamp Duty grant and a £5,000 furniture pack for those purchasing properties with friends. These enticing benefits add extra value to the homebuying experience.
Discounted Mortgage Rates: A Competitive Edge
Meanwhile, Stonebond is making waves by offering discounted mortgage rates of 3% for two years, compared to the typical 5-6% rates offered by high-street lenders. For a property valued at £500,000 with a 25% deposit, this could result in a substantial reduction of up to £16,875 in mortgage costs, which will be paid as an allowance upon completion of the sale.
Tesla as a Housewarming Gift
Hayfield Homes has taken a more lavish approach by offering a brand new Tesla worth £40,000 to £60,000 as a perk for buyers of their £660,000 four-bedroom homes in Bromham, Bedfordshire. This extravagant incentive is intended to make the deal irresistible to potential homeowners.
“Rent to Buy” Schemes and Lower Deposit Options
Some developers are also introducing “Rent to Buy” schemes. In these setups, tenants pay rent to the developer for a specified period, which is then counted as part of their deposit when they decide to apply for a mortgage. Additionally, large developers like Barratt Developments are running pilot programs that allow buyers to put down just a 2.5% deposit upfront, with the remaining 2.5% being formed from six months’ worth of rent payments.
The Tricks of the Trade to Keep Prices High
In the competitive world of real estate, developers are using every trick in the book to keep their prices high. Emma Fildes, a buying agent in London, notes that this practice may look better on land registers but also emphasises the importance of buyers disclosing any incentives they receive to their mortgage brokers.
Understanding the Value of New Builds
Alex Mosley, a buying agent in London, offers a crucial piece of advice to buyers: “Always try to understand a new build’s premium against the second-hand market before making an offer.” While new builds often come at a premium, the average agreed sales price of a new build dropped by 9% between March and July this year, according to market analysts TwentyCi.
The Government’s Housing Targets
The British government unveiled ambitious housing targets in its 2019 election manifesto, aiming for 300,000 new homes annually. While some hurdles have arisen, it’s still possible that the government may achieve its goal of 1 million new homes by the end of 2024.
In conclusion, the housing market is a dynamic landscape, and developers are finding innovative ways to maintain high prices while offering tempting incentives to potential buyers. Whether it’s paying mortgages, providing cash perks, or throwing in luxury items like Teslas, these tactics are reshaping the real estate market. Buyers must navigate this evolving market carefully to ensure they get the best value for their investments.