Bovis announces £78.7million loss after collapse of mortgage market

Bovis Homes has announced that its revenue fell almost 50 per cent last year, due to the sharp fall in the number of homes sold as potential buyers struggle to get a mortgage in the current economic climate.

The house building group completed 1,817 homes in 2008, about a third fewer than the number completed in 2007, and Bovis said that the average price it sold a home for was £150,800, compared to £179,500 the year before.

Last year it managed to reduce its costs through redundancies and restructuring of the business, cutting overheads by about 45 per cent when compared to 2007, but its £78.7million loss for 2008 follows profits in 2007 of £123.6million.

Bovis owns about seven years of land supply with residential planning consent, it said in the statement, and started 2009 with a “a good number of homes at an advances stage of construction.”

“These homes can be finished quickly when sold,” Bovis said, but the lack of available mortgage finance has had a disastrous effect on the house building business, and continuing difficult market conditions predict that this will prove to be easier said than done.

“Reflecting the low levels of activity during the second half of 2008,” Bovis’ forward sales position at the beginning of January stood at 425 reservations – 48 per cent lower than at the same time in 2008.

“The UK housing market was in well-publicised decline throughout 2008 and trading conditions in the housebuilding sector were the worst seen in many years,” the statement explained. “Accordingly, the Group’s priorities over the short term are to maintain its strong balance sheet capability to weather current market conditions in an orderly fashion and be well positioned for any market upturn.”

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