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Range of incentives being offered for new build property buyers

And it is likely to continue as a new report shows that building contractors are not passing on the increase in costs of materials and wages, thus keeping the price of new buildings down. They are choosing to absorb the extra costs in an attempt to fill order books.

Incentives being offered to those buying new homes include part exchange, deposit paid, fees paid, moving costs paid, mortgage subsidies, guaranteed rentals and even a guarantee of future prices.

And in some cases developers are offering carpets, curtains and light fittings as well as cars and holidays.

'No one is likely to choose a home solely because of the incentives available. However, if an incentive solves a particular problem and makes a move possible, it can have an important influence when deciding which home to buy,' said David Collett, spokesman for www.NewHomesForSale.co.uk.

Another approach is the try-before-you-buy schemes that offer the home for rent with the option to put the first six month's rental payments towards the purchase price should the tenant decide to buy.

'The offer of shared-equity, a further innovation for a tight market, can also have a major role in making new-build attractive,' added Mr Collett.

However there could be fewer new homes being built because of the credit crunch. The price of new construction work in the first quarter of 2008 fell by 2.4% compared with the previous quarter whilst costs rose by 1.1%, according to the latest Tender price Index from the Royal Institution of Chartered Surveyors Building Costs Information Service.

The effect is that construction contractors are not passing on the full impact of rising costs. 'Contractors appear to be a little nervous about future workloads currently, and with new work output expected to fall slightly this year, input cost rises are likely to be the key driver of tender price rises. The credit crunch and the slowdown in economic growth are expected to have a greater effect on construction output than first thought,' said spokesman Peter Rumble.

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