HOUSEBUILDERS are offering to pay half your mortgage for up to two years as they struggle to get properties off their books, in the latest sign that the housing market is at a turning point.

Surveyors said last week that house prices fell for the second month in a row in September, at their fastest pace for two years.

Meanwhile, Capital Economics, the consultancy, said it now expected house prices to drop 3% next year and by the same amount the following year.

The firm has been bearish before and has had to recant, but it thinks there are finally signs the housing market is undergoing a meaningful slowdown following five interest-rate rises in a year - not to mention the desperation of housebuilders.

Barratt Developments, one of Britain’s largest housebuilders, is offering buyers a mortgage rate of just 3%, just weeks after saying sales had tumbled by 10% after the Northern Rock crisis.

The deal is available on mortgages up to £350,000 and borrowers must put down a deposit of at least 10% and take a two-year fixed-rate deal. Assuming you borrow 5.8%, on an interest-only basis, monthly payments on £350,000 would be £1,692. Barratt would pay 2.8%, or £817 of that, each month, saving a buyer £19,608 in the first two years.

David Bexon at Smartnewhomes, a property site, said: “All housebuilders are having to work a lot harder to sell properties and I expect to see more incentives on offer over the coming months. The housing market is weakening and many of these developers have financial years which end in December, so they will need to shift units quickly.”

Barratt is not the only developer offering such deals. Persimmon will pay up to £500 a month towards mortgage costs for the first two years, and Wimpey offers up to £600 a month. Firms will also contribute to deposits, cover some of the stamp duty and even offer part exchange if you cannot sell your home in time.

However, buyers should be careful as there are concerns that new-build properties will be hardest hit by a downturn.

Matthew Wyles at Nationwide said: “These incentives aren’t acts of charity. When you see developers offering big incentives it is a sign that they have significant amounts of unsold stock. Buyers therefore have to find out what the property is really worth and make sure they are getting good value for money.”

New-build properties tend to be sold at a premium of up to 15% to older properties. When house prices are rising strongly, as they have been in recent years, this is not an issue, but if prices stagnate or fall, you may find you struggle to sell the property for more than you paid for it.

Many economists believe the annual rate of growth will slow from more than 10% now to about 4% next year, and some new-builds are already falling. The average asking price of new-builds fell by 1.1% in August, according to Smartnewhomes.

Many analysts believe one and two-bedroom flats are at risk, particularly those in provincial city centres such as Newcastle, Leeds and Nottingham where huge levels of development have resulted in oversupply. Two-bedroom flats in Brook Court, Radford, Nottingham, are on the market for £89,950, but were being sold for £139,000 this time last year.

The Mortgage Works, part of Nationwide, stopped offering buy-to-let mortgages for new-build flats in 2005, and UCB Home Loans, Nationwide’s other buy-to-let lender, has also pulled out of this part of the market.

Other lenders now require larger deposits. GMAC, for example, will only lend up to 75% of a property’s value – down from 90%. It has also changed its definition of new-build from properties built in the past 12 months, to those built in the last two years.

West Bromwich requires all borrowers looking for a new-build flat to have a deposit of at least 25%. Previously, the minimum was 5% on residential loans and 15% on buy-to-lets.

James Cotton at L&C Mortgages, a broker, said: “Lenders are becoming more cautious about advancing loans on new-build properties. Some want borrowers to put down larger deposits in case prices fall.”

Surveyors are also becoming more conservative. Robert Bryant Pearson at Allied Surveyors said: “Given the state of the market, the figures valuers will be putting on new-build properties will be more cautious. I think things will get worse for a lot of one and two-bedroom flats because a disproportionate number have been built. There will be people who have bought in the last few years who will be in negative equity, where the value of their outstanding mortgage is greater than that of the property.”