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November proved to be the cruellest of months for housebuilders鈥� shareholders, with Barratt, Persimmon and Taylor Wimpey all crashing to year lows after bearish trading statements. And, so far this month isn鈥檛 looking any better.

The catalyst for the bloodbath is of course the fall-out from the global credit squeeze. The woes of the US sub-prime mortgage market have led to more than 拢29bn of writedowns globally as the world鈥檚 banks lick their wounds.

Official figures released this week reveal that the volume of market loans in the UK banking system plunged from 拢640bn in August to just 拢249bn by the end of September. Also this week the one-month sterling LIBOR (the rate at which banks lend to each other) hit a 10-year high. The frenzy surrounding this turmoil has also turned a construction sector share price slump into a crash.

Leslie Kent, a director at broker JM Finn, said: 鈥淚t鈥檚 not Armageddon, but the sector will need time to adjust to tighter credit. There鈥檚 been a serious change in the market and how housebuilders fare in the crucial first quarter will determine if the current decline is a permanent factor. For contractors it鈥檚 slightly different 鈥� in some respects they have held up quite well.鈥�

Since April, which the Square Mile took to be the top of the market, shares in housebuilders have plunged more than 50%, wiping something in the region of 拢10bn off their collective value.

On their way south, they have managed to drag their some of their construction cousins down with them, sending Kier, Carillion and Morgan Sindall into a tailspin.

It鈥檚 not really Armageddon but the sector will need time to adjust

Leslie Kent, broker JM Finn

Yet, by and large, shares in contractors, perennially undervalued by the City, have survived relatively unscathed.

Balfour Beatty is trading at about 480p, closer to its year-high of 508.5p than August鈥檚 year-low of 383.25p.

Kier, the contractor that has never understood why the City doesn鈥檛 love it but remains on the market, is exposed through its housebuilding division, which accounts for a fair chunk of profit. The spectacular collapse in its share price, which remains near its year-low, began at the same time as the housebuilders鈥�.

But in the last three months, compared with the housebuilders, it has not fared too badly. On 9 September it was trading at 拢19 and this week at about 拢16.

Contrast that with Barratt, which was trading at 拢9.12 on 9 September. This week, three months later, the price was 拢4.80. (Barratt鈥檚 year-long high is 拢13.10.)

Kent said: 鈥淚t鈥檚 not much consolation but the City is much more savvy when it looks at construction sector shares these days. It no longer tars them with the same brush and can see the difference between the contracting and housebuilding markets.鈥�