Persimmon will heap more misery on the beleaguered housebuilding sector tomorrow when it cuts 1000 jobs and reports a vicious slump in sales.

Chief executive Mike Farley will confirm he has been forced to wield the axe in what is likely to be a grim trading update to the City. The cull, a fifth of the 5000-strong staff, would add to the gloom for the industry after Barratt Developments last week slashed 1000 jobs and Taylor Wimpey cut 900.

Housebuilders are reeling from the worst downturn in the property market for 30 years as mortgage lending and sales dry up and prices fall. The value of Britain's seven biggest builders listed on the stock market has crashed nearly 90% in the past 18 months.

Royal Bank of Scotland today added to the pain with a wave downgrades. "A severe volume and price correction now looks largely inevitable for the UK housebuilders," it said as it advised clients to sell shares in Persimmon, Taylor Wimpey and Barratt.

It now reckons Persimmon shares, which fell 71/2p to 2281/2p today, should be worth just 184p. It cut its target on Taylor Wimpey, unchanged at 313/4p, to 19p and said Barratt, up 3/4p at 43p, will fall as low as 30p.

Persimmon launched a consultation with staff at the end of May, warning that "several hundred" jobs were at risk. It will confirm the number at around 1000 tomorrow. The firm, which owns housebuilding brand Charles Church and bought Westbury for £643 million in 2006, last updated the market in April when it said sales were down 24%. Farley will tomorrow admit things have got even worse.

Barratt is likely to reveal a sales slump on Thursday, but is expected to try to reassure investors over its £1.8 billion debt mountain by providing details of a deal with its banks.

Dresdner Kleinwort analyst Alastair Stewart last week warned there was "a very real danger" Barratt and Taylor Wimpey could collapse. It came after Taylor Wimpey's shareholders rejected a £500 million plea for help.

The crisis in the housing market has seen hundreds of jobs cut at estate agents, with experts warning up to 15,000 face the chop. Construction firm Galliford Try has shed 260 staff and Kier Residential, the private housing division of Kier Group, is closing three offices with the loss of 300 jobs.