Redrow and Bovis on casualty list as sales dive, jobs go

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Both firms have been hard hit by the lack of mortgage availability in the wake of the credit crunch and collapse of confidence among buyers.

Redrow chief executive Neil Fitzsimmons said: "It remains difficult to assess how long the sharp reduction in sales activity will continue or the extent to which house prices will be affected. However, we expect the difficult markets we are confronting may persist for some time."

David Ritchie, his counterpart at Bovis, said it was the "worst market backdrop the group has seen for many years", and slashed the dividend.

Both firms today cut 40% of their workforce - almost 1000 jobs - taking losses in the industry to more than 5000 in recent days.

Redrow said reservation levels for new homes in the last six months were down 55% while cancellation rates were up 30% - and rising sharply in recent weeks - as buyers unable to secure mortgages pull out of deals.

It sold just 3925 new homes in the 12 months to the end of June, 19% less than the 4823 of a year earlier. The average selling price fell from £159,000 to £157,000. Forward sales have crashed from 2148 a year ago to 1189.

Fitzsimmons said: "The housing market continues to be severely affected by the credit squeeze. Homebuyer confidence is now also being influenced by concerns about the future for house prices and interest rates.

"As a result, the market for both new and second-hand homes has declined rapidly to transaction levels not experienced for very many years with the price of homes now declining."

Sales at Bovis fell 32% from 1256 to 851 in the first six months of the year, with the average selling price down from £204,500 to £196,500. Reservation levels have slumped 35%, and Bovis said firsthalfprofits will be "adversely impacted by this sharp reduction in volume".

It plans to cut the interim dividend from 20p to 5p. Redrow is also considering its future dividend policy.

Ritchie said: "The backdrop to the market is pretty awful. The volumes have been affected by that backdrop, which has largely been caused by the turmoil in the financial markets, and the inability to get a mortgage has been a massive constraint on the consumer."