Persimmon announced it has suspended construction work on new sites until the mortgage market improves.
In the last three weeks, 'the unprecedented tightening' in the mortgage market had led to lower sales volumes and increased cancellation rates. At the same time, the backdrop of extensively reported concerns about the global credit crisis have continued to undermine consumer confidence,' it said in a statement.
The house builder is now predicting its revenues will fall by almost a quarter this year. Persimmon said total sales revenue for 2008 was currently about £1.37 billion, down 24% from £1.8 billion last year.
Shares in Persimmon are falling along with other house builders and housing-related stocks including retailers, estate agents and building materials groups.
Concerns about the housing market continue to intensify. The British Bankers' Association has warned that UK mortgage approvals fell to the lowest level in a decade last month, while financial management group Merrill Lynch said house builders were entering a new and 'potentially' volatile period.
Another leading UK house builder, Bovis, has warned of job losses if the current climate does not change. Taylor Wimpey, Redrow and Barratt are all suffering declines.
On top of this house builders face increasing costs for materials and labour.
