The fallout from the global credit squeeze claimed another victim on this side of the Atlantic as one of Britain’s biggest housebuilders yesterday blamed an abrupt turnaround in consumer confidence for a drop in house sales.

In one of the firmest indications yet that the housing market is slowing, Bovis said that its sales had fallen sharply over the past six weeks and it would now miss its full-year forecasts. Profits will come in at least 7 per cent below expectations.

The warning was seen as a sign that the problems in the US housing and finance markets were beginning to affect consumer confidence in the UK. The City is betting that conditions in Britain’s housing market are set to deteriorate — the value of Britain’s top seven housebuilders has fallen by £8.7 billion, a drop of 42 per cent, since April 6, calculations by The Times show.

The crunch has also begun to cast its shadow over the jobs market, as a report showed employment growth on a worsening trend. The Recruitment and Employment Federation/KPMG reported that the rise in placements for permanent employment last month was the weakest pace in 13 months. Alan Nolan, a director of KPMG, said that the financial services and construction sectors could suffer the brunt of job losses that lie ahead.

Consumer confidence has already been hit in the wake of the turmoil in financial markets since August, according to the latest gauge of sentiment yesterday from the Nationwide Building Society. Its measure of how consumers feel about the economic situation dropped by three points last month to a reading of 99.

Ed Stansfield, property economist at Capital Economics, said: “The shift that we have seen in the US housing market is a good illustration of the potential significance of sentiment in property markets. It can be extremely powerful and it can precipitate quite big adjustments.”

The test for sentiment in the UK would come when Halifax and the Nationwide began reporting regular month-on-month falls in house prices, Mr Stansfield said. “There’s this idea that if sentiment is to drop that could act as a trigger for a US-style drop in prices.”

Construction sector activity was set to stay weak for a number of years and he added that investors’ hoarding of cash in response to the crisis was compounding uncertainty over prices in the £700 billion commercial property sector. Prices in that market fell 1.6 per cent in September, the sharpest drop since May 1990. Total returns on property fell for the first time since the last recession, data from Investment Property Databank show.

Panmure Gordon, the broking house, said yesterday that residential house prices would fall by 6 per cent over the coming two years.

As anxiety over the knock-on consequences of the credit squeeze continues to intensify, Mervyn King, the Governor of the Bank of England, told the BBC last night that the financial sector’s upheavals have further to run.

Mr King said that “things have improved significantly since August”. However, he argued: “I think that most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred.”

Fears over the impact at home and abroad were heightened still further as markets punished the United States again by forcing down the value of the dollar, propelling the euro to a fresh high and sterling above $2.09. Oil prices rose above $97 a barrel and gold approached 27-year highs of $825 an ounce.