Slump hits flat-pack home sales

The homes are being sold by Ikea

The credit crunch has been blamed for a slump in sales of flat-pack homes on Tyneside, which were targeted towards first-time buyers on low incomes.

The 119 timber-framed flats and houses - costing up to £149,995 - are being built in Gateshead and were said to be three times oversubscribed last year.

But of 36 flats completed, 15 have been sold and 11 reserved. However, 10 still remain unsold.

Potential buyers are now being offered six-months to "try before they buy".

The homes were initially sold by furniture giant Ikea, with a one-bedroom flat starting at £99,950.

Alan Prole, managing director of Live Smart@Home, the company licensed to build BoKlok properties in the UK, told Radio 4's You and Yours: "When we launched last year we had very significant interest and frankly nearly all of those applicants would have secured a mortgage.

"But now there are 50% less mortgages available and higher deposits are required."

He said the company had been forced to work "very very hard" to convince mortgage lenders of the quality of the timber-built homes.

Mr Prole said the company planned to continue with another development in Sunderland, but would be "more cautious" than this time last year.