The value of Britain's biggest housebuilders continued to fall yesterday as City analysts cast more gloom on the sector before what promises to be a bleak trading update from Persimmon today. The company will confirm about 1,000 job cuts and is expected to write down the value of its land bank by up to £300 million, as well as to record a grim outlook for the sector.

Fears of further job losses and writeoffs were compounded by predictions that some companies could be forced to raise money through heavily discounted share placings to stay afloat, diluting shareholders' value.

Taylor Wimpey was hit worst, falling 4p, 14.2 per cent, to 27p, after being dubbed one half of a “distressed duo” by Mark Hake, a Merrill Lynch analyst, along with Barratt Developments, which fell 1p to 40p. Taylor Wimpey was affected by comments from a Federal Reserve official that house prices would continue to fall in the United States, where the company had £1.2 billion in sales last year.

Mr Hake wrote in a note to clients that most of the big house-builders would need to write down the value of their land and to raise new funds, as the industry struggled against a backdrop of falling prices and fewer buyers as mortgages become more difficult to secure. He said that Taylor Wimpey may have to write down the value of its land by another 35 per cent, on top of the £550 million hit that it took last week.

He added that Barratt Developments, which is trying to put together a rescue fundraising and is to update investors on trading on Thursday, would have to undertake any capital-raising at a 50 per cent discount to its share price.

Heavy job cuts at Persimmon, where the shares fell 3.4 per cent, or 8p, to 228p, came after news last week that 1,000 workers would go at Barratt Developments and that 900 staff were being shed at Taylor Wimpey as it closes 13 of its 39 regional offices.

Sentiment towards the builders' shares was also hit by a downgrade from analysts at Royal Bank of Scotland, who gave warning of a severe correction in prices across the sector. The feeling is likely to worsen tomorrow when Bovis Homes, down 7p, or 2.4 per cent, at 311p, and Redrow, which fell 12p, 11.1 per cent, to 98p, give trading updates.

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