The UK's first development of Ikea houses has fallen flat with buyers.

The flat pack development in Gateshead was conceived two years ago as the answer to the UK's housing shortage.

It was hoped that a terrace of Ikea-designed BoKlok houses and flats would provide affordable and ecological properties.

Download the new Independent Premium app Sharing the full story, not just the headlines

But the plans were hit by credit drying up and the collapse of the housing market.

Twenty of the 36 apartments that have already been built in St James Village, in Felling, Gateshead, remain unoccupied.

And while six of the terraced homes, costing between £132,500 and £149,500, have been reserved, the company behind the development, Live Smart Home, have turned to a range of incentives, worth up to £5,000, to encourage would-be home owners to commit.

People who reserve their new home by January 25, and complete the sale by the end of March will be able to claim a package of incentives including new bikes, garden accessories and free travel on the Newcastle Metro system.

And those who buy the first 13 apartments will also receive a year's gym membership for two people, a family holiday and their legal fees will be paid.

The company admitted the package was designed to "entice" buyers in light of the credit crunch.

John Hanson, Live Smart Home's operations director, said: "We acknowledge the credit crunch has made it difficult for our target market to obtain a mortgage.

"With interest rates falling further and with the incentives we are offering, we are hopeful that all the houses will be sold fairly quickly."

In total, five apartments have been sold at the St James Village development, seven are being rented and four people are on Live Smart Home's Try Before You Buy scheme.

The scheme was introduced in November to try to boost sagging sales figures. It allowed potential buyers to rent a home for up to six months, and then get their rent payments back to use as a deposit on buying the house, to try to boost sagging sales figures.

BoKlok homes were designed in Sweden in the mid-1990s to address the need for affordable properties, and to provide people with high-quality properties at a low price.

The BoKlok concept is to provide space-saving, functional homes offering good quality at a price which puts them within reach of households earning between £12,500 and £30,000 a year.