Britain's biggest developer stops building new homes

Britain's biggest house-builder yesterday abandoned its plans to build any homes on new sites until the mortgage drought ends.

persimmon said the lack of cheap mortgages is having a devastating impact on its business.

It warned that the number of potential buyers is shrinking at a record rate - few have the confidence to enter the market - and prices are falling.

Mike Farley, the firm's chief executive, said: "We're not going to build more when we're unable to sell what we have."

Persimmon's plight is the latest worrying sign of the property market decline, which is the result of a dramatic fall in the availability of home loans.

The mortgage drought got even worse yesterday when the Britannia revealed a 0.75 percentage point increase on its popular fixed-rate mortgages - one of the biggest single jumps in rates since the crisis began.

Shares in all firms in the housebuilding sector tumbled after Persimmon's bleak statement to the stock market yesterday.

Around £420million was wiped off the shares of the five biggest housebuilders - Barratt, Taylor Wimpey, Persimmon, Berkeley Homes and Bellway.

Persimmon, which is Britain's biggest housebuilder, said today that sales in the first four months of the year had fallen by 24 per cent.

Speaking before today's annual meeting (AGM), the company blamed the slump on unprecedented conditions in the mortgage market and called on the Government to scrap stamp duty for purchases under £250,000 for all first time buyers.

"This is not so much a pricing issue as about mortgage availability. For the first time in my experience there are not enough mortgages for the houses available," Mike Farley, chief executive of Persimmon, said.