Just in Time for the Housing Meltdown, IKEA Homes

IKEA just introduced their newest product to Gateshead, England — but unlike their popular furniture line, there's no assembly required.

Homebuyers with incomes between £15,000 and £35,000 per year will move into brand-new, modestly priced apartments in St. James Village this month, paying an estimated 20 percent below market price.

Too good to be true? Not for a BoKlok home (pronounced "BOO clock" — a Swedish word that translates loosely to "smart living"). The BoKlok concept, which IKEA first introduced in Sweden in 1996 and later expanded into Finland, Norway, and Denmark, is to provide low-cost, but high-quality homes using prefabricated construction.

A slideshow of IKEA's new house can be found here.

But the foray into England, the company's first venture outside of Scandinavia, will pit the strategy against a housing market dogged by rising home prices, a mortgage crisis, and last year's Northern Rock implosion.

The state of the current housing market is not a concern for Neil Shaefer, the spokesman for Live Smart @ Home, the exclusive developer of the apartments — and, coming in April, townhouses in Britain.

"There are not many places for example where if you earn £15,000 a year you can still buy a 50 percent stake in a house for £45,000," he explained by email.

The apartments and townhouses range from £99,500 to £149,500 if purchased outright or less if purchased under a shared-ownership agreement.

IKEA has adopted guidelines to ensure the homes reach the targeted consumer. Potential buyers are required to put down a 5 percent deposit, and total mortgage costs cannot exceed 40 percent of the buyer's annual net income.

To avoid speculators flipping the homes and driving up prices, qualified buyers are randomly chosen in a lottery, and Live Smart @ Home will handle all resales.

And they're not done yet. Mr. Shaefer said they have major plans for expansion in Britain. An announcement for a second site is imminent; Live Smart @ Home is currently looking into London, Edinburgh, and Glasgow.

by Taylor Umlauf