Shares lose 5% of value after housebuilder warns deepening market crisis will hit profits

Shares in housebuilder Taylor Wimpey have continued to fall today after yesterday's stern profits warning, making it clear that the housing market has deteriorated markedly in recent weeks.

The price fell more than 1% in early trading today, following a 4% fall yesterday.

In an interim management statement the company said that despite having 7% more sales outlets than this time last year, its order book is down 26% compared with the same point last year.

It also said that the UK housebuilder is now seeing “pressure on prices” because of the lower values being achieved in sales of secondhand homes, combined with the cuts in lending by mortgage providers.

The statement said: “First-time buyers and investors [are] facing particular difficulties as a result of the increasingly restricted availability of mortgages. Sales rates remain significantly below those of the equivalent period of 2007 on a pro forma basis, with higher levels of cancellations being experienced.”

Overall, Taylor Wimpey said that it now expects profits for the year to be at the low end of previous predictions.

The news came as investment bank Citigroup said the housing market had “dropped alarmingly in recent weeks” and cut its profit estimates for all UK listed housebuilders.