Sales of new homes have tumbled by a quarter since the beginning of 2008 as the difficulty of securing a mortgage has prevented first time buyers getting on the property ladder.
According to report from Persimmon, one of the UK's biggest house builders, there has been a steep change in the market in recent weeks, and it is entirely as a result of the unprecedented changes in the mortgage
Recent months have seen mortgage prices rise and the 100 per cent mortgage market die a death along with many other mortgage products, forcing first time buyers to find a hefty deposit if they are lucky enough to secure a mortgage deal which they can afford in the current financial climate.
"2008 industry volumes are likely to be lower" the report said, with the "reduction in the UK mortgage market together with tightening of credit criteria and lending terms" responsible for the fall in sales.
As a result of the drop in business, Persimmon shares fell 41.5p to 608.5p, and Barratt Developments' shares tumbled 36.25p to 294.25p.
If further evidence is needed that the building trade is feeling the squeeze of the credit crunch, Persimmon has shelved plans to build on new sites until sales pick up again. This is an even worse scenario that the industry faced in the housing recession of the early 1990s, when Persimmon slowed work on existing sites, but did not quit expanding completely.
In order to drum up new business, some house-builders are offering to pay prospective customers' stamp duty, estate agent fees, surveyor's fees and moving costs to secure a sale.
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