The move came as Countryside Properties, the Essex-based housebuilder, brought further gloom to the housing market, with its own profits warning.

The latest flood of bad news for the market sent shares in Britain’s biggest housebuilders into a tailspin. Shares in Barratt fell 4.8 per cent, Wimpey was down 5.8 per cent and Persimmon dropped 6 per cent.

Shares in Countryside closed down 9 per cent at 249p.

Countrywide, which operates from high street brands such as Bairstow Eves and John D Wood, said that transaction volumes fell 20 per cent in August compared with the same time last year.

A spokesman for the company said that volumes had been hit by the string of recent interest rate rises, coupled with warnings from Mervyn King, Governor of the Bank of England, that house prices may fall.

The spokesman said that, despite the sharp reduction in volumes, prices had remained relatively stable, except for homes worth £300,000 and above. “People are waiting and seeing what happens to the housing market, because Mervyn King frightened them off a bit,” he said.

The drop in transaction volumes coincided with a 29 per cent reduction in business at Countrywide’s surveying and valuation division, which carries out surveys and valuation reports for mortgage lenders.

The company said that lenders had pulled back on remortgaging activity in the last few months in the run-up to the Financial Services Authority regulating mortgages. The warning prompted analysts at Oriel to downgrade their forecasts from pre-tax profits of £78.5 million to £67 million.

Despite tricky trading conditions, the company insisted it was keen to proceed with an estimated £50 million deal to buy Bradford & Bingley’s property chain and surveying business.

Meanwhile, Countryside gave warning that purchasers were negotiating harder and taking longer to do deals even on lower-priced properties in London and the South East. Previously the company said this problem had been confined to homes worth more than £300,000.

Countryside added that a combination of the weak market and construction delays meant it would complete just 950 homes this year, 14 per cent below expectations.

The company also said it was unlikely to sell as much land as previously expected. The group said buyers had been trying to take advantage of a bid approach from Alan Cherry, its chairman, to strike a discounted deal, but that it would not negotiate on those terms.

Analysts at Dresdner Kleinwort Wasserstein cut their profit forecasts for Countryside Properties from £32.8 million to £18.1 million.

BID CONSPIRACY THEORY REJECTED

The profits warning from Countryside Properties comes just three weeks after Alan Cherry, its chairman, said that he was plotting a bid for the company, fuelling speculation that yesterday’s announcement was a cynical ploy to drive down the share price.

Evolution Securities questioned whether Countryside was trying to dent the share price to smooth the way for a bid. However, a source close to Countryside insisted that this was not the case, adding: “Mr Cherry is not stupid. The market would see very quickly through any deliberate attempt to talk down the share price.”

The company said that Mr Cherry was continuing to make progress with his offer, which is expected to be between 270p and 280p a share.

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