Shares brush bear low amid fear for 'thousands' of building jobs

FRESH turmoil in markets drove share prices into official bear market territory yesterday amid worsening news of job losses in housebuilding.

Mounting fears of recession sent the FTSE 100 tumbling 3 per cent at one point, pushing the UK market below 5,385 and into bear territory – defined as a 20 per cent fall from its recent peak of 6,732 last year. The index rallied later to close 72.2 points down at 5,440.5.

The black mood was lifted slightly in late afternoon by a pledge from Ben Bernanke, chairman of the US Federal Reserve, of continuing support for America's stricken banks and a further $5.37 fall in the price of Brent crude to $136.50, well down on the peak of almost $146 hit last Friday.

But the late relief brought no respite for banks and housebuilders, with fresh falls that took Bradford & Bingley down 19 per cent to 34p, Royal Bank of Scotland down 3 per cent to 194.9p and Barratt Developments down a further 3.7 per cent to 39p as problems piled up in the sector.

Persimmon said one in three of its Scottish staff was to be laid off, prompting a warning from a leading trade body that Scotland's housebuilders could axe up to 8,000 jobs if the downturn worsens.

Persimmon, which has regional offices in Bathgate and Hamilton, said 85 staff would go out of a total of just over 260.

The cuts are part of a wider 1,100-strong redundancies programme at the company – about one in four of its staff – and against a slump in completed house sales of nearly a third year-on-year to 5,501 in the six months to June. Persimmon's average selling price fell 4 per cent. Persimmon builds between 1,800 and 2,000 homes a year in Scotland, where it introduced its upmarket Charles Church brand in 2006.

A spokesman for Homes For Scotland told The Scotsman yesterday: "A total of 52,500 are employed directly in housebuilding in Scotland and we believe between 10 and 15 per cent of these jobs are at risk."

That suggests the axe hovers over between 5,250 and 7,875 housebuilding jobs in Scotland.

Homes for Scotland, which represents firms accounting for 95 per cent of new homes for sale in Scotland, said a further 47,250 jobs were indirectly related to housebuilding.

Jonathan Fair, chief executive of Homes for Scotland, said: "The severe problems facing our members will have even more serious repercussions the longer UK government inaction continues. Indeed, our own Scottish Government's ambitious housing targets are now at risk."

But Fair added that Scotland was the most resilient housing market in the UK and needed to "hold its nerve and steady the market".

Taylor Wimpey and Barratt Developments have confirmed nearly 2,000 combined redundancies – about one-sixth of their workforces.

Commercial property slump

THE year-old downturn in commercial property values gathered pace last month, according to property adviser CB Richard Ellis.

The firm, one of the biggest contributors to industry-wide data from Investment Property Databank, also noted that corporate rents had fallen for a second straight month.

CBRE said capital values fell by 1.3 per cent in June and were now 18.5 per cent lower than their peak last summer.

The data suggests that the industry downturn has entered a second phase that will continue to put pressure on property loan covenants.

CBRE said rents slipped by 0.1 per cent in June as the UK economy deteriorated and demand for workspace dipped.