House builders' land banks now worth less than farmland

Many plots of land bought by house builders for future sites are now worth less than farmland, according to Alastair Stewart, analyst with stockbroker Dresdner Kleinwort.

Stewart told the Financial Times: “We are hearing ever-darker rumours of house builders’ cash flow.”

His comments come on the eve of Bellway's annual results, due to be published tomorrow morning, which have taken on a larger significance than normal. The City view is that they will offer a deeper insight into the current trading conditions in the whole of the housebuilding sector than anything published within the past two months.

Housebuilders’ shares were down by 25% last week, reflecting on-going pessimism which Bellway will either lighten - or make worse.

Bellway is Britain’s third-largest housebuilder by market capitalisation and the FT gives its management the accolade of being “among the most respected in the sector”, hence the anticipation of what details will surface.

Quoted housebuilders in total have a combined market capitalisation of £3.7bn which is a staggering 80% lower than at the start of the credit crisis.