Bovis and Persimmon struggle as housing market shows no sign of recovery

Permalink: Bovis and Persimmon struggle as housing market shows no sign of recovery
by Kay Murchie

Bovis Homes is cutting a further 200 jobs as the housebuilding industry grapples with the ongoing housing market downturn.

The company has already cut 400 workers since last summer, representing a 60% reduction from its workforce this time last year.

Bovis has also announced that it will not pay a dividend, which had already been slashed from 20p to 5p.

In 2008, the company completed 1,817 homes, compared with 2,930 the previous year.

Meanwhile, fellow housebuilder Persimmon will also scrap its dividend as it too struggles with the severe downturn in the property market.

Persimmon said the short-term outlook for the property market remains challenging and the company is focusing on conserving cash until the situation improves.

The developer said it completed the sale of 10,202 units in 2008, down from 15,905 in the previous year.

Earlier this week, the Nationwide Building Society’s latest index showed that house prices in 2008 fell by almost 16%, bringing the average house price down to £153,048.

Meanwhile, the Halifax reported that house prices in the UK continue to fall and are currently at August 2004 levels.

In December, house prices fell by 2.2%, taking the annual fall to 16.2% from December 2007 - the largest fall since the lender began collecting data.

Last month, the Royal Institution of Chartered Surveyors predicted that house prices will fall by a further 10% in the next 12 months, meaning house prices will have fallen by 25% from peak-to-trough.

Last week the Bank of England announced that mortgage approvals declined in November to 27,000 - the lowest since records began in January 1999.

Analysts believe that the property market will continue to be subdued for sometime, particularly until lending resumes to normal levels.