House builders suffered their biggest fall in shares this week since the beginning of the property downturn, seeing more than 10 per cent wiped off their value.
In what is reminiscent of the 1990s property crash, the seven biggest home builders have had more than £400million wiped off their combined value, leaving their total worth at less than £4billion, compared to £18.5billion just a year ago.
Barratt Homes was worst hit, as its shares tumbled 24 per cent to the lowest they have been since the company nearly went under in the early 1990s. It is now languishing under £1.7million of debt, and is worth just £317million, down from £3.8billion a year ago.
In a reactive statement to current market speculation, Barratt has said: "we expect the requirement for development provisions (often referred to as land write downs) in the current year will be limited." and that it "remains comfortable with market consensus forecasts for completions numbers (18,300) and profit before tax and exceptional charges (£395m)."
Taylor Wimpey, the UK's largest housebuilder by production, is having to close a third of its offices and has suffered a 15.6 per cent decline in share price, wiping £126million off its market value.
House sales have practically come to a standstill in recent weeks, with the Royal Institute of Chartered Surveyors (RICS) reporting that sales are at their lowest since they began recording data in 1978. People cannot afford the soaring mortgage
rates and a growing number of households are falling into negative equity, becoming trapped in their homes.
As profits dwindle and houses remain unsold, building companies are finding that they cannot afford to finish projects, sometimes abandoning sites where houses are unfinished and roofless.
In the wider housing market, Halifax has reported an eight per cent decline in house prices, recording falls in seven out of the last eight months.
Humberts, a national estate agent, has been forced into administration after struggling under heavy losses for several months.
Meanwhile, unemployment jumped 38,000 in the three months up to April compared to the previous three months, with April suffering the biggest increase for two years. Construction workers have been at the forefront of these losses.
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