Britain's housing market has deteriorated rapidly in the past few weeks, since a key survey showed house prices fell 2.5 per cent in March as buyers struggle to get mortgages, housebuilder Persimmon said.
Britain's biggest housebuilder by market value and said today its sales so far in 2008 were down 24 per cent year-on-year to £1.37 billion ($2.72 billion), as the credit crisis bit deeper.
Persimmon shares dropped in trading and at 12.40pm were down 8.5 per cent at 594 pence.
Persimmon said March visitor numbers were encouraging but "over the last three weeks the unprecedented tightening in the mortgage market has caused a further deterioration of the housing market leading to lower sales volumes and increased cancellation rates".
"As a result an increase in discounting, marketing costs and incentives are being utilised in the market to compete for the reduced level of demand and this is having a negative impact on margins," the company said.
The timing given by Persimmon ties in with a report earlier this month from Halifax, Britain's biggest mortgage lender, that house prices fell 2.5 per cent in March.
Britain's housing market, which enjoyed a decade-long boom, had been slowing before the global credit crisis began last August and housebuilders' share prices have fallen sharply.
Unlike a previous housing downturn which began in the late 1980s, British interest rates are relatively low and employment is historically high. But the credit crisis has hit consumer sentiment and has led to the withdrawal of many mortgage offers.
Indicators have shown house prices falling for several months, leading the government to urge mortgage lenders to pass recent Bank of England interest rates cuts on in full to borrowers.
Landsbanki analyst Simon Brown said Persimmon was a top performer in the sector and better placed than many of its peers but there was little "specific action the group can achieve internally" to improve the situation.
"Change would have to be from an improved outlook for mortgage lending ... the risk is currently on the downside although we consider the trough in mortgage lending will pass at the end of June," he said.