Bovis huge profit warning adds to builders' woes

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Chief executive Malcolm Harris said conditions in the housing market had "deteriorated sharply" since March when mortgage lenders withdraw their best offers.

He said reservation levels had slumped 30% so far this year and warned that profits for the first half would be "significantly lower than it had previously anticipated".

He added: "With ongoing market uncertainties, the outlook for the remainder of 2008 is difficult to predict."

Bovis shares fell 22p to 449p, having crashed from a peak of 1204p little over a year ago.

Today's warning came less than two weeks after blue-chip builder Persimmon reported tumbling sales and was forced to postpone its planned new developments until conditions improve.

Other builders have suffered a similar fate and talk of further consolidation has swept the market. Bellway and Redrow are in talks over a possible £1.3 billion merger as they battle to overcome the downturn.

Both Halifax and Nationwide, two of the largest mortgage lenders, recently reported the first fall in house prices year-on-year since 1996, while the number of home loans issued has plummeted. Government figures on Friday are expected to show repossession levels at their highest for 17 years.

In March, Bovis said profits last year fell from £132 million to £123.6 million as the credit crunch took its toll on the housing market and wider economy.

It warned that the "short-term outlook for the housing market in 2008 remained uncertain" and analysts pencilled in profit forecasts of £65 million for the year.

But today Bovis was even more pessimistic, lowering prices "to reflect local market conditions". Harris said: "Negative developments in the mortgage market have continued apace, with a large number of mortgage products being withdrawn, mortgage interest rates and fees being increased and more substantial deposits being required by a range of different lenders."

Reservations so far this year were down from 1979 to 1382, Harris said, and the timing of any improvement in the market was "uncertain".