Britain's big seven housebuilders saw more than £300 million wiped from their combined market value in early morning trading today as UBS slashed its targets across the sector, bringing to £13.5 billion the total value erased from the big builders in the past year.

Analysts at UBS today gave warning of falls of up to 20 per cent in the price of new homes.

They told clients today that housebuilders' sales volumes for the full year were likely to fall at least 30 per cent, which would put sector profitability under "extreme pressure."

Shares in Barratt Developments, Britain's second largest builder of new homes, tumbled to a fresh low, down 19.5p to 137p, a decline of 12.5 percent, erasing £65 million from its market value to £477 million. A year ago Barratt shares were changing hands for nearly £11, valuing the firm at £3.8 billion. The firm had just completed a £2.2 billion cash acquisition of Wilson Bowden.

A year ago Britain's seven largest housebuilders had a combined market value of £18.5 billion. Today's sell off diminished their combined value of the battered builders by over £300 million leaving them worth in total just under £5 billion.

Concerns are mounting that Barratt, which is labouring under about £1.7 billion of debt, will by the end of this year be forced into a heavily discounted share rights issue to raise new cash. Declining sales will put its ability to service interest payments under pressure and hamper its ability to quickly restart its building programme when market conditions eventually improve.

UBS today cut its price target for Barratt to 160p per share from 375p. Barratt has slowed its opening of new sales sites to a snail's pace.

Taylor Wimpey, the largest UK housebuilder which is in the process of closing about a third of its sales offices, was also hit badly after UBS slashed its price target on the shares from 165p to 90p. Taylor Wimpey shares fell more than 9 per cent, down 7.5p to 74.75p, wiping £78 million from its market value to £780 million.

A year ago Taylor Wimpey shares hit a high of 455 1/2p valuing the group at £4.8 billion shortly after the all-share merger of George Wimpey and Taylor Woodrow.

Industry data out yesterday showed that the building of new homes slumped to a record low.

UBS cut its target price on Persimmon, the third biggest builder of new homes but today the UK's most valuable housebuilder, fro, 640p to 400p. Shares in Persimmon, the most lowly geared of the big housebuilders, fell nearly 4 per cent, down 17.5p to a long-time low of 438.5p, wiping £54 million from its market value to £1.3 billion.

A year ago at the peak of the housing market Persimmon was valued at £4.1 billion. Persimmon said in April that it would stop building on new sites until market conditions improve.

Among the other big builders, Bovis Homes saw its share price target cut from 530p to 411p, Bellway was marked down 580p to 795p and Redrow, viewed like Bovis as a takeover target, was cut back from 285p to 208p as UBS warned of a risk of capital raisings coming onto the agenda.

Shares in Bovis declined nearly 6 per cent, a fall of 23.75p to 387.25p, reducing its market value by £30 million to £466 million. Bellway shares suffered a similar rate of decline, falling 35p to 568p, marking its market value down by £41 million to £652 million.

Redrow shares tumbled 8.5 per cent, down 19p to 204.25p, leaving its market value at £327 million, a fall of £30 million in early morning trading.

Berkeley Group, London's largest housebuilder, felt the pain from the sell-off in the sector as its shares declined 2.5 per cent, a fall of 19.5p to 780p, leaving its market value at £940 million, down £24 million in the morning.

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