Bovis warns on market conditions

Bovis says current interest rates are softening the housing market

Housebuilder Bovis Homes warned that it will sell significantly fewer houses in 2008 than in 2007, if current market conditions continue.

The forecast came with the release of results, which showed a 6% fall in pre-tax profits for 2007 to £123.6m.

Home completions fell by 6%, to 2,930 units, as Bovis said it had been hit by economic uncertainties and higher borrowing costs hitting confidence.

And it called for "decisive action" to be taken now to reduce interest rates.

Housing squeeze

Bovis chief executive Malcolm Harris told the BBC: "First-time buyers... are buying properties as a home, not as an investment.

"It is this group of home owners I believe is being squeezed quite hard."

Bovis first said last September that higher interest rates were starting to slow the growth in house prices.

Many UK homebuilding firms are now set to build fewer homes in the face of tighter mortgage lending, and the possibility of house price falls.

Various surveys have charted a decline in the housing market and price of annual house inflation since last summer.

Bovis says its performance during the spring selling period is critical in determining its building volume for the current year.