The house-building sector is in such a bad way that experts in the City are speculating over the prospect of large companies following in the footsteps of banks and calling on shareholders for extra capital. UK house-builder Bellway yesterday confirmed the state of the market, blaming a ‘restricted mortgage supply’ for the lack of a ‘normal spring selling surge.’

In the last month house prices have fallen by 2.4 per cent and experts are predicting price drops of as much as 20 per cent by the end of 2008. According to the Royal Institute of Chartered Surveyors (RICS) demand is continuing to weaken, as new buyer enquiries fall further.

“The real issue is the collapse in the number of housing transactions.” said RICS spokesperson Ian Perry earlier this month. “This has very real implications, not just for the property industry but also the high street and wider economy.”