The gloomy state of the UK's housing market is expected to become clearer this week as a number of leading housebuilders report on their prospects for the year ahead.
Persimmon, which has extensive interests in the West Midlands, reports tomorrow followed by Barratt on Wednesday and Redrow the day after.
It is not so much the results of the companies as their outlooks which is preoccupying the thoughts of analysts.
The tone was set last week in a sombre note from Dresdner Kleinwort in which the broker said it was expecting the reporting season to reveal the "grim reality" facing the housing sector.
The forecast did little to boost optimism on the markets, with Taylor Wimpey down eight per cent in one day and Persimmon also hit, down five per cent following publication of the note. Barratt also struggled, dropping four per cent.
Persimmon's full-year figures are expected to reveal pre-tax profits of between £575 million and £600 million in 2007, from £582.1 million in 2006.
In its pre-close update in early January, the housebuilder said that its full year profits would be in line with mid-range c onsensus earnings, or around £590 million. It added that it expected a five per cent drop in legal completions due to lower consumer confidence and the tightening of credit markets.
However, investors will be focusing attention on the order book and looking for any indication of a pick-up in time for the all-important spring selling season.
"The question mark on the horizon is the forward order book which showed one of the worst performances in the sector in the period to end December 2007," Numis said in a note.
A surge in cancellations from 20 percent to 30 per cent, as mortgage lenders reduced their willingness to lend, took Persimmon's order book down 14 per cent, from £701 million to £603 million.
Analysts also noted that the group had experienced an increase in incentives and marketing costs. These figures should weigh strongly on estimates for 2008 and 2009, which show a sharp reduction in pre-tax profit, volumes and prices.
UBS has said it sees profits falling to £ 420.5 million in 2008 and £481.5 million in 2009, while Cazenove's prediction is for a pre-tax profit of around £490 million next year and £450 million in 2009.
Persimmon has played down the importance of volumes and highlighted that margins and sales prices increased in 2007. It is also seen as one of the strongest players in the sector and many experts believe it could therefore withstand a downturn better than its rivals.
For Barratt, analysts are predicting pre-tax profits of between £190 million to £200 million. The previous year's interims were £180.2 million, but this time round the figures will include Barratt's £2.2 billion purchase of rival Wilson Bowden.
Forecasts are that unless FTSE 250 rival Redrow reports strong half-year figures then it could be the subject of bid activity as the sector looks for further consolidation.
Meanwhile, further woe was seen with a fall in house prices for the fifth month in a row during February. The average cost of a home in England and Wales fell by 0.2 per cent to £174,400, according to property information group Hometrack.
At the same time the annual rate of house price inflation continued its downward trend to stand at just 1.4 per cent, its lowest level since April 2006.
However, one glimmer of hope has been an increase in the number of new buyers registering with estate agents during the month, up 7.9 per cent compared with an 11.5 per cent fall in January.
