Bovis Homes has slashed its dividend and cut 400 jobs as it grapples with the deepening housebuilding slump. More big cuts in the price of its homes are also planned as it tries to tempt buyers.
Its chief executive, David Ritchie, said the Government should urgently find ways to solve the current mortgage famine which is preventing thousands of people from moving home.
The company's action follows similar cuts and possible dividend reductions at rivals Redrow, Barratt, Persimmon and Taylor Wimpey.
The number of homes sold by Bovis fell from 1,256 to just 851 in the first half to June, sending pre-tax profits plummeting from £58.4m to £9.5m.
The average price of a Bovis home fell by 4 per cent to £196,700, but Mr Ritchie said further cuts of between 3 and 5 per cent were planned as it tries to attract buyers to its sites.
"We will be more competitive in our pricing," he said. The action reflects stagnant conditions, with sales up to 22 August down 39 per cent on last year at 1,574.
Bovis has already closed one major office and made staff cuts which will save £10m a year. The company has avoided buying new land and is also cutting the dividend from 17.5p to 5p. But debts have come down to £93m, giving gearing of 13 per cent, a lot better than other builders.
"The group has taken decisive action in response to the toughest period of trading it has experienced in its time as a public company," said Mr Ritchie. He predicted that the difficult conditions would persist for the "foreseeable future with continued poor mortgage liquidity limiting housing market activity".
He called on the Government to support the housing market by looking at ways to improve mortgage liquidity. He said a mooted stamp duty holiday would be welcome, but added, if "you can't get a mortgage to support your transaction you are not going to get off the starting blocks".
The broker Cazenove applauded the company's strategy and said it "appears to be a potential survivor of the housing battle ground". The shares closed up 13.25p at 441.25p.