Tom MacLennan of Tenon Recovery, who were managing the liquidation, said the closure was a "clear indication" that the housing market was in difficulty

MacLennan added: "The much documented credit crunch and rapid tightening of lending criteria by mortgage companies has clearly affected consumer confidence and sales."

However, it said business has been badly hit by a contraction in the housing market, with sales and income down significantly during the last year, and increasingly so in the last several months.

The closure comes just a year after the company heralded record sales in 2006 of about £65 million – 25 per cent up on the previous year.

Managing director David Alves said at the time that demand was outstripping supply in Edinburgh.