According to research by St Trinity Asset Management and LSL Land and New Homes arms of the business, 2010 marked a turning point for part exchange schemes with 13,732 more transactions taking place.
The part exchange process involves a home mover selling their property to a developer in order to purchase a new property. The new home has to be worth at least 30% more than their existing property for the exchange to take place.
The part exchange market boomed during 2007 and early 2008, with transactions hitting 36,799 and 32,959.
But by 2009 part exchange transactions had fallen by 69% year on year to 12,164.
Ian Long, managing director of St Trinity Asset Management, said levels are well below the market peak but beginning to look more positive.
He said: “With an easier sale possible, no estate agency fees, and no chain on the home they are buying, part exchange is becoming a popular incentive for home movers looking at new build homes.”
Private new home development increased steadily in the last year, with 21% more new homes built in England in Q3 2010 compared with 2009.
In the first three quarters of 2010, 65,800 new homes were built in the private sector – 5,090 more than in the whole of 2009.
Long added that sales will continue to rise as more house builders increase their activity in the market.
“In a market where transactions are still suppressed by restricted lending and concerns over the direction of house prices, developers are turning to part exchange to help sell these new homes.
“We expect new house production to show a similar improvement next year, with greater emphasis on part exchange to help boost transactions. As a result, we forecast that part exchange sales will rise a further 15% in 2011,” he explained.
At the end of 2010, developers had approximately 1,060 unsold second-hand homes in their inventories, a 12% jump from approximately 930 a year ago.
At the peak of the part exchange market, developers had an estimated 2,830 new build part exchange homes at the end of 2007.
