Builders Redrow and Bovis to axe 40% of staff

Published on Wednesday 9 July 2008 10:29

THE gloom in the housebuilding sector intensified today as another two companies said they are axing hundreds more staff.

Builders Redrow and Bovis Homes both said they are planning to cut back on around 40 per cent of their workforces and close offices as they get to grips with the economic slowdown.

Bovis expects that around 400 staff will have lost their jobs since the turn of the year as sales dry up. The latest action follows housebuilder Persimmon's announcement yesterday that 1100 jobs had been cut since January, while last week Taylor Wimpey and Barratt Developments together revealed around 2000 job losses.

In an update on trading today, Redrow, whose current developments in Edinburgh include Optima on Ferry Road, said: "The UK 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."

Redrow, which said it will be left with about 850 staff following the job cuts, said that it completed 3925 homes in the year to the end of June, down from around 4823 last year. And the average selling price slipped from 159,900 to 157,000.

The situation intensified in the second half of its year, with net reservation levels down 55 per cent. Cancellation rates have also increased "significantly" in recent weeks, the firm said, with customers not being able to secure mortgage offers to proceed to the exchange of contracts stage.

Group forward sales at June 1 were nearly half last year's rate, at 1189. At Bovis, the UK's fifth biggest housebuilder, the number of legal completions plummeted from 1256 to 851 in the second half of the year.

The average selling price of private homes reduced from 204,500 to 196,500.

But it hopes the job losses announced today and other cost-saving measures will cut overheads by a fifth, although it will also take a one-off 2m charge.