A profit warning from Bovis should hardly come as a surprise given the announcement 10 days ago that Persimmon, Britain's most valuable housebuilder, had stopped opening up new sites for construction. Persimmon, like Bovis today, blamed the virtual freeze on lending to first-time buyers.

More remarkable is the lack of recent profit warnings from other similar-sized regional housebuilders whose area managers, like those at Bovis and Persimmon, feed through trading data at the end of every week.

The last time the industry suffered a downturn in housing sales was the spring and summer of 2005 before a cut in interest rates revived the market. That mini downturn sparked some merger and acquisitions activity led by Persimmon's takeover of Westbury.

In October 2005 Westbury, the southern housebuilder with a similar range of small family homes to those built by Bovis, delivered a 26 per cent decline in its full-year profits — its financial year end was August — and by November of that year Persimmon had made a recommended cash bid worth £643 million for the business.

A string of other deals followed but with the targets selling out for ever larger premiums to their net asset values, culminating in Barratt Developments's £2.2 billion purchase of Wilson Bowden a year ago. Barratt today carried a market value of less than £1 billion implying all the goodwill paid for in the Wilson Bowden deal is now considered worthless.

If there is going to be another round of consolidation investors should expect Persimmon to be the first to strike before concrete evidence emerges of a revival in the mortgage lending market.

Both Bovis and Redrow will be in Persimmon's sights as two housebuilders with a good product that sells well when the mortgage market is in full flow but which suffers, like today, from their limited scale when the lending market is a lot tighter.

Time has proved that Persimmon, unlike Barratt, has not overpaid for its acquisitons. With Persimmon's gearing set to fall below 25 per cent this year and hundreds of millions of pounds at its disposal for acquisitions, investors should not be surprised if executives at Persimmon have not started sharpening pencils.

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