Bovis Homes slashes dividend and jobs as mortgage market fails to revive

10 January 2009 / by Rebecca Sargent
Housebuilder Bovis Homes has been forced to withdraw a final dividend for 2008 as it struggles to contend with the current economic climate.

The Group has also been forced to cut further jobs. In fact, according to its latest trading update it now employs 60 per cent last staff than in January 2008.

Speaking of the future, the statement said: "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.

"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."

The number of homes sold by Bovis Homes in 2008 was 1,817, down from 2,930 in 2007, more than 1,000 less and the average sales price fell from £179,500 to £150,800.

The housebuilding industry was one of the first to be hit following the onset of the credit crunch, because of the impact it had on mortgage lending. And, despite several attempts by the Government to boost the mortgage market, they have clearly failed to make life easier for house builders.

Bovis said: "The outlook for the housing market, combined with that of the wider economy, appears challenging at present.

"Confidence is low, bad news predominates, and corrective economic actions which have worked historically have not yet seen a positive response."

However, the housebuilder remains optimistic, adding: "Interest rates are likely to remain low and with lower interest rates and with lower house prices, affordability will improve.

"When consumer confidence returns, the low levels of current housebuilding across the country will accentuate the well publicised supply and demand dynamic in the UK housing market."

The news follows yesterday's announcement from housebuilder Persimmon that it will also be withholding a final dividend this year.

© Fair Investment Company Ltd