In a sign of the increasingly acute contraction of the worldwide property market, building supplies company Wolseley announced a slew of layoffs and store closures, sending its shares tumbling as much as eight per cent in early trading.

The slowdown was also reflected yesterday by property developer Barratt as it reported its forward order book was 43 per cent smaller than the previous year, and self-storage firm Big Yellow which reported a first-half profits slide of 12 per cent.

As the slowdown continues to bite and profits fall, UK-based Wolseley is cutting costs in an effort to remain within its banking covenants. It announced yesterday that it would close around 200 shops and slash around 2,000 staff due to the particularly sharp slowdown.

The cuts mean that the company has reduced its overall headcount by about 15,000 staff, representing 18 per cent of its total headcount, since August 1 last year.

In the US it has launched plans to cut 3,400 staff at its loss-making stock business by the end of November.

However, chief executive officer Chip Hornsby told reporters during a conference call that even the US commercial division, which has so far been a driver for profits, would see a slowdown next year.

Commercial real estate values in the US may drop as much as 30 per cent from their peaks as financing options are pinched by the credit crunch and lenders demand higher returns, JPMorgan Chase & Co. said last month.

The Investment Property Databank (IPD) UK Monthly index showed last week that prices for shops, offices and industrial real estate tumbled by the largest margin on a month-by-month basis in IPD's 22-year history in October, as Britain's economy edged closer to recession.