Bovis Homes Group today warned that it will have to write down the value of its land and inventory of houses next month, following a sharp deterioration in selling prices since August.

The company, which is one of the least indebted of Britain's housebuilders, said it was experiencing the worst trading environment for many years and predicted that house prices would continue to fall well into next year.

This morning, Halifax announced that house prices in October fell by a record 15 per cent compared to the same month last year.

Shares in Bovis Homes fell by 7.25p in early trading to 350p.

David Ritchie, chief executive, said: "There will be further pressure on prices next year and it would be a brave man who predicted the bottom of the market."

Bovis Homes is one of the few housebuilders not to make any writedowns so far and analysts were sceptical of its claim that a forthcoming cut in the valuation of its assets would not be "significant".

Analysts at Panmure Gordon believe the company will have to write down as much as 30 per cent of its holdings.

However, Mr Ritchie said that the company had been buying land conservatively in the last two to three years and was still able to make a profit on "most" of its house sales, although gross margins on sales had come down from the 26 per cent achieved in the first half of the year.

"There has been a broad spectrum of writedowns across the sector from 5 to 50 per cent and you would expect us, given our conservatism in investing in land, to be at the bottom end of that spectrum," Mr Ritchie said.

The company has admitted that it will need to "take into account house price evolution between now and the date of its preliminary results announcement in March 2009, together with any reliable estimate for price falls beyond this latter date", suggesting that it sees no price recovery during 2009.

Bovis has had to cut the selling price of almost all homes sold since since August, and offer greater incentives to buyers, as it tries to sell the houses it has already built. This has had a detrimental effect on profit margins, the company said.

In common with other housebuilders, Bovis has already cut costs and overheads by restructuring its business and making staff redundant but it said today that it had identified further overhead savings.

Cost cutting actions so far has seen Bovis shut its eastern regional office in Cambourne, Cambridgeshire as part of around 400 job losses this year. It has also merged the key functions of its northern and central regions.

Bovis expects to complete 39 per cent fewer home sales this year, at around 1,800 against 2,930 in the year before, with a third more social and partnership home sales. It is has made no purchases of land in the second half of the year and has restricted starting work on new sites.

Work on individual new homes is now stopping at the roof, until a reservation is achieved.

Bovis said that it was well within its banking covenants with net debt of £124 million. However, the company has already begun talks with its existing bank lenders over refinancing its its borrowings, which mature in February 2010.

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