Barratt Developments subsided another 11p to a 13-year low of 156.5p as Cazenove added its weight to the growing talk that the builder would have to raise £600m in a deeply discounted rights issue.

Analyst Anthony Codling said that land writedowns and office closures may not be enough to stem losses of indebted builders since interest costs would eventually exceed any profit from home sales. 'With cashflows in ragged retreat there is an increasing chance of capital raising in the coming months,' he predicted.

Barratt, with £1.5bn of debt, and Taylor Wimpey, down 0.25p to 82.25p, with £1bn, are most at risk and Codling estimates that a £580m fundraising from Barratt would drive its share price down to 112p, while an £866m issue from TW would send its price to 55p.

He also said the builders would have to follow Taylor Wimpey in closing up to a third of their regional offices. Persimmon lost 11.25p to 456p and Galliford Try fell 4.25p to 39.5p.

The Times