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Bovis Homes has warned it will reduce the number of homes it builds by up to 5% this year, reacting to reduced housing demand following the Northern Rock crisis.

Malcolm Harris, Bovis鈥� chief executive, said the company, which built 3,123 homes in 2006, was anticipating a fall in volume of up to 5% across 2007. This was despite Bovis鈥� acquisition of Elite Homes this summer, which itself built 450 homes last year.

In a statement to the stock exchange on Tuesday morning, in advance of analyst briefings tomorrow, the company said the average sale price of homes was also due to be 3% down on last year, because smaller homes were being sold.

Harris said the fall in volume stemmed from fragile consumer demand caused by successive rises in interest rates, the US sub-prime crisis and the Northern Rock debacle. 鈥淕iven five interest rate rises and a number of other shocks, it鈥檚 no surprise the market鈥檚 been pretty slow. Without looking for excuses, the weekly sales have been quite reflective of the news agenda.鈥�

In addition he said that while the acquisition of Elite, a northern regional housebuilder, was progressing well, a 拢3m write-off for costs related to that acquisition would affect profitability.

He also said sales margins would remain at previous levels, and that he was confident of the long-term outlook for the market.