Bovis Homes followed Persimmon, its rival, by scrapping its dividend yesterday, as housebuilders struggle under the worst trading conditions for years.

Bovis also made a further 200 members of staff redundant. It has reduced a headcount of 1,000 by 60 per cent in a year, as sales have plunged by more than 40 per cent. Persimmon kicked off another dismal round of reporting from UK housebuilders on Thursday by announcing that it would not pay a final dividend after a sharp decline in sales.

Bovis's outlook for the year ahead is not much better. The order book for new builds has halved, and it will take a charge of about £5 million relating to the restructuring, which should help to save up to £50 million in 2009.

Bovis said yesterday: “Confidence is low, bad news predominates and corrective economic actions which have worked historically have not yet seen a positive response.”

Actions such as sharp cuts in interest rates and the bailout of the banking sector have not succeeded in restoring the mortgage market to health, which is vital to helping the housing sector to rebound.

On Thursday the Monetary Policy Committee of the Bank of England cut interest rates to a record low of 1.5 per cent in an effort to kick-start the lending market. British house prices fell by close to 16percent last year, according to Nationwide. Experts from companies such as Halifax and Knight Frank expect them to fall a further 10percent to 15percent this year.

Bovis sold 1,817 homes last year, almost 40 per cent down from 2,930 in 2007. The average sales price fell to £150,800, down from £179,500 in 2007, as it built more social housing.

It is the only UK housebuilder not to report large writedowns in the value of its land in the past six months. It is expected to announce a writedown of about £200 million to £250 million at its full-year results in March. Bovis has a relatively low debt burden of £109 million, using less than half its committed banking facilities, which will provide some comfort to investors. Its share price, which declined by 35 per cent last year, fell 4p to 440p yesterday.

Mark Hughes, of Panmure Gordon, said: “While the performance on debt is significantly ahead of our expectations, news that the company will not be paying a final dividend is disappointing. Clearly, market conditions remain difficult and are unlikely to improve in the foreseeable future.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax