Many of Britain's biggest house builders could be forced into deeply discounted emergency rights issues before the end of the year, City analysts are warning, amid unprecedented gloom about the prospects for the sector.
More than £300m was wiped off the value of the country's six largest house builders yesterday, with investors panicked into a sell-off by a doom-laden report on the sector from investors at UBS. The investment bank said there was little prospect of any imminent recovery from leading housebuilders while mortgage lending remained depressed.
Mark Stockdale, UBS's lead housing analyst, said he was therefore slashing his price targets for Barratt Developments, Persimmon and Taylor Wimpey. He also made large reductions to the dividends he is forecasting from Barratt, Redrow and Taylor Wimpey.
Mr Stockdale said housebuilders, analysts and investors had been taken by surprise by the pace at which the housing market had deteriorated in the last two months and that he saw no prospect of improvement until 2010.