Bovis Homes Group recorded a £78.7 million loss last year despite dismissing 60 per cent of its UK workforce in the face of the economic downturn.

The British housebuilder went into the red after writing down £93.1 million on the value of its houses and land bank.

Demand for new homes has slumped amid a dearth of mortgage finance and low consumer confidence.

In a drastic attempt to reduce costs, Bovis cut its workforce from 1,039 to 441 employees last year.

The company said today that 2008 had been a “difficult year for employees”.

Its share price rose 5 per cent this morning as the market welcomed its relatively low debt levels.

Bovis is the second-lowest-geared listed UK housebuilder after Berkeley.

The group sold only 1,817 homes in 2008 compared with 2,930 in 2007 and saw its revenue drop by 49 per cent to £282.3 million from £555.7 million over the same period. The average price of a Bovis home also fell by £29,000.

Despite starting the year with a plan to construct 3,500 homes, Bovis only built 1,782 houses, 39 per cent down on the previous year.

New home starts fell further, by 65 per cent to 1,179 units in 2008.

David Ritchie, chief executive of Bovis, said today: “2008 has been an unprecedented year. Declining mortgage finance availability and poor economic conditions, allied with low consumer confidence, brought about the toughest trading environment for many years.”

Panmure Gordon analysts upgraded the housebuilder from "hold" to "buy" and said: "We believe that with low levels of gearing and a continued focus on cash, Bovis can react positively to any market improvement."

Bovis, which is based in Longfield, Kent, has renewed its bank loans and said that it started 2009 with a large number of finished stock homes that it aimed to sell at a “strong cash margin”.

The company's low debt levels mean that it did not sell off as many homes through aggressive cost-cutting as some of its rivals last year.

As of March 6, 2009, the group had secured 772 reservations on homes as compared to 1,262 reservations at the same point last year, a decrease of 39 per cent.

Bovis said in a trading update in January that it would scrap its final dividend to try to weather market conditions.

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