Bovis sets out new profit warning

Bovis says recent selling has been awful

Housebuilder Bovis Homes has issued another profit warning, as the housing market continues to slow.

Sales reservations were down 70% in the eight weeks to 4 May compared with last year, while total sales reservations this year so far are 30% lower.

The firm said banks were limiting lending and increasing mortgage rates, thereby deterring potential buyers.

"The spring selling period has been absolutely awful," it said. Other building firms face similar problems.

Earlier this year, Persimmon, the UK's largest housebuilder, said it was "cautious" about prospects for the housing market in 2008.

Already in March, Bovis warned that it would sell significantly fewer houses in 2008 than in 2007, if the market conditions continued.

Liquidity

In its latest statement, Bovis chief executive Malcolm Harris said: "Surprisingly, visitor levels have held up, but purchasers keen to buy can't raise mortgages."

"What we need is for mortgage liquidity to come back into the market."

The board predicts full-year sales volume to be "materially lower" than the previous 20% to 30% fall it had predicted in March, when it released full-year results.

The firm said it was lowering the price of some homes, including in Cardiff's Bay area, but that in the South of England prices remained robust.

Commenting on the news, James Rowlands, public policy officer at the Royal Institution of Chartered Surveyors said: "Further bad news from housebuilders shows the impact the credit crunch is having on people who want to buy homes, but are no longer able to get a mortgage."

"As we see the impact of current housing market conditions on the activity of housebuilders, the government's target of building 240,000 new homes each year is slipping even further out of reach."

Bovis shares closed 2.8% lower at 458p in London.