Bovis Homes warns of profits fall

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The Independent Online

Bovis Homes today warned that a 30-per-cent slide in reservations so far this year would leave half-year profits "significantly lower" than expected.

The housebuilder said conditions in the housing market had "deteriorated sharply" since its last trading update in March, with the number of reservations down to 1,382 homes this year from the 1,979 seen a year earlier.

With cancellation rates also on the rise, it said it risked missing its full-year target for legal completions if conditions did not improve.

The comments from Bovis mirror those made by other firms, with Charles Church owner Persimmon recently reporting a 24-per-cent drop in revenues. It said demand had been impacted by an "unprecedented" tightening in the mortgage market.

Housebuilders have been on the front line of the credit crunch as cash-strapped banks tighten up lending terms for borrowers and call for bigger deposits as fears for the market grow.

Mortgage deals have gone up for those trying to get a foothold on the property ladder despite a series of interest rate cuts in the last six months.

Bovis shares fell by almost 4 per cent today, although the damage was limited by speculation of further consolidation in the housebuilding sector.

A newspaper report at the weekend said Bellway had approached rival Redrow about a possible merger to create a £1.3 billion company, causing shares in both companies to rise today.