Uncertainty about interest rates is one of the key reasons why there are fewer buyers around, hence the reintroduction of sweeteners, according to a report published this month by Black Horse Agencies. It also warns that the need to entice potential buyers with carrots has been exacerbated by a new breed of house buyer who expects far more when acquiring a new home.
Ten per cent of new homes sold in the first eight months of 1998 involved part exchange, said Alan Gottschalk, regional director of Black Horse Agencies. In 1996, when the exchange incentive peaked, 11 per cent of new homes were sold through part exchange.
As a general rule, most builders insist the new home must be worth at least 30 per cent more than the old property. Most part-exchange deals offer 90 per cent of the property's open-market value. Bett Homes is currently offering 100 per cent part exchange to buyers who are legally complete on their new home by the end of August. Some developers also offer help with legal fees, moving costs and furnishings such as carpets and curtains.
Mr Gottschalk said: "There has always been an element of part exchange, regardless of the market, but more buyers became involved in it when the market slowed down in the 1990s. In June 1997, the percentage fell to 6 per cent but by August this year, it has risen back up to 10 per cent."
He said that, as the market has "toughened" with increases in interest rates and a decrease in price-hikes, the necessity for part exchange has also increased. There are currently fewer buyers in the market and those who intend to buy are not feeling pressured. "As the market continues to be less buoyant, incentives will become more the norm."
However, equally important in the return of the incentive is the new breed of buyer. "People in the market are becoming much more discerning about what they want."
Housebuilders Federation spokesman, David Mote, said: "Incentives have been coming into the market since about last August - people use incentives when things slow down - and part exchange is definitely coming back."Reuse content