Axe set to fall on 1,000 jobs as housebuilding woes deepen

HUNDREDS of fresh job cuts will be unveiled this week by Britain's battered housebuilders as the prospect of government intervention to stem the growing industry crisis intensifies.

It is thought Persimmon, the UK's largest housebuilder by market value, is set to announce that as many as 1,000 posts will go – about a fifth of its workforce.

The firm, which recently confirmed that projects were being put on hold, is due to update the City tomorrow. Any job losses on that scale would match those made by rivals Barratt and Taylor Wimpey last week.

Meanwhile, reports yesterday suggested that Kier Residential, the private housing arm of construction group Kier, was preparing to axe 300 staff as the industry wrestles with one of the most dramatic downturns in living memory. Both Kier and Persimmon have sizeable operations north of the Border.

The credit crisis and a slump in consumer confidence has led to a sharp fall in new-house sales. Construction firms are keen to see the government take action to inject liquidity into the mortgage market and kick-start activity among buyers.

It seems increasingly likely that an announcement on the crisis will be made before the UK parliament breaks up for the summer recess. Key measures to underpin the market may include funding to buy land from under-pressure builders.

As house prices tumble, firms have been forced to downgrade the value of their landbanks.

Last week, Taylor Wimpey confirmed it would write off £660 million on the value of its landbank and work in progress due to the tough market conditions. At the same time, the group shed 900 staff and unveiled plans to close 13 offices.

Investors will also be keen to hear this week from Barratt Developments, where some 1,000 jobs are under threat.

The firm – due to release a trading statement on Thursday – has reportedly struck a deal with its lenders to strengthen finances hit by the housing market downturn.

That may provide some support for a share price that has been hammered in recent months amid worries over Barratt's debt levels. The group paid £2.2 billion last year to acquire rival Wilson Bowden, at the top of the housing market boom.

Smaller housebuilders have also been forced to wield the axe in recent weeks.

On Saturday, The Scotsman revealed that Scottish housebuilder Cala Homes had downed tools on development sites and cut about 30 jobs from its workforce of around 400 in an effort to keep costs down.

Galliford Try, which owns Scottish-based Morrison Construction, confirmed that it was cutting more than 250 jobs in its UK housebuilding division in response to the weaker market.

Industry body Homes for Scotland recently warned that "several thousand" jobs were threatened by the slowdown.