Guardian UK: Housebuilders come crashing down

[marmar]

Housebuilders come crashing down
Jill Treanor and Graeme Wearden guardian.co.uk, Wednesday June 11 2008



The Financial Services Authority is closely monitoring the house building sector as the value of the big construction firms continued to shrink today.

Britain's bruised and battered housebuilders suffered another torrid day on the stock market after Merrill Lynch warned that the housing market could face a repeat of the 1990s crash. Some £5bn has been wiped off the value off the big builders, including Persimmon, Barratt Developments and Taylor Wimpey since the beginning of this year. Many analysts believe the firms, which have lost £15bn in value since last summer, are close to breaching their banking agreements.

A spokeswoman for the FSA told guardian.co.uk that "we are keeping the house building sector under close scrutiny".

Shares in Barratt Development plunged by as much as 40% this afternoon, forcing the firm to put out a statement in which it insisted that trading was still in line with expectations. This helped to partially reverse the fall by the market close.

In a research note published this morning, Merrill analysts said that the early 1990s housing market has "increasing relevance as a comparator".

"There is growing evidence of consumers now behaving in a manner similar to that seen in the early 1990s, in that concerns over job security and falling house prices are leading to a reluctance to make a house purchase," Merrill added. ......(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/jun/11/housing.property.crash