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Shares in most of the majors fell again, despite Persimmon coming in above expectations, and Bovis reporting solid figures - albeit scaring the City horses with its unexpected venture into home rentals, which will hit end-of-year profits.

In terms of outlook Bovis was again more cautious, repeating its previous statements that the market weakened after the general election and Budget. Persimmon said only that it was experiencing the 鈥渘ormal鈥� summer market slowdown.

However, neither suggested a really significant drop in prices or sales volumes, instead predicting steady, if subdued, trading. Nor did they give any sign of being close to writing down land values (Persimmon actually wrote back 拢70m).

Aside from stock market darling the Berkeley Group, all the housebuilders have a share price which values their firms significantly below the cumulative value of all the land and other assets they hold.

Why so negative? The answer lies in the fears over possible house price falls, and the highly cyclical nature of the housebuilding business model. Or as one analyst put it more colourfully this week, 鈥渢hey鈥檙e shitting it there鈥檚 going to be a double-dip recession.鈥�

If house prices fall by 10%, the value of the underlying land can fall much more. If that happens to a heavily indebted company (as Taylor Wimpey and Barratt were in the credit crunch), combined with lower revenues which increase its gearing (debt as a percentage of equity), a company can quickly be pushed near to breaching its banking covenants.

None of this currently applies to Persimmon or Bovis - Bovis has cash in the bank and Persimmon鈥檚 gearing is just 5.3% - but the reek of what happened so recently to Barratt and Taylor Wimpey hangs heavy over the industry. So everyone suffers.