First-time buyers shun new builds after Government axes Help to Buy

“Off-plan sales are the foundation of most housebuilders’ businesses – selling fewer homes before they’re built is bad news for their bottom line,” he said. 

“In what’s a cash-intensive business, housebuilders typically borrow to build homes, paying it back when they’re sold. But with more homes only sold after they’re finished, it means developers are borrowing money for longer and at higher interest rates.

“With off-plan sales harder to come by, housebuilders have responded by slowing build rates to preserve capital and ensure they’re not left with large numbers of unsold finished homes.”

The East of England is the region with the lowest off-plan demand, with only 25pc of new-builds bought before completion.

At the other end of the scale, London has recemented itself as the country’s off-plan capital, with 47pc of homes sold before completion. But the figure is still the lowest it has been since 2012.

A key factor fuelling new-build purchases in recent years was the Help to Buy equity loan scheme, which helped 350,000 people onto the housing ladder. 

It allowed first-time buyers to purchase a new-build home with a 5pc deposit and a 20pc Government-backed equity loan, or 40pc for those buying in London, but the scheme closed to new applicants in October 2022.

Fifteen-year mortgage rates also played a major role in dampening new-build interest, with buyers reluctant to take on a loan. The average two-year fix peaked at 6.85pc last August, but now stands at 5.91pc, according to Moneyfacts.