BOVIS, the Kent-based housebuilder, has warned that unless there is a further fall in interest rates, sales will drop in 2008.

Reservations of Bovis homes have fallen in what chief executive Malcolm Harris called a weak market.

Mr Harris, who is based in New Ash Green, near Gravesend, said 2007 had been a challenging year following five interest rate rises and the reduction in mortgage funding, especially for first-time buyers.

The banking crisis has squeezed borrowing, and despite a recent quarter per cent cut to 5.25 per cent, the rate remains high for many purchasers.

He said: "Looking forward, although the long-term position relating to supply and demand has not changed, the current housing market is weak."

He said sales reservations for 2008 to March 7 were down from 1,582 to 1,262, a fall of 320, on the same period a year ago.

"Our performance through the spring period remains critical in establishing the likely volume outcome for the current year.

"For the year as a whole, unless decisive action is taken now to reduce interest rates and more normal conditions return to the mortgage market, it is likely that volumes will be well below those achieved in 2007."

Company chairman Tim Melville-Ross steps down in July, to be replaced by Mr Harris who is succeeded as chief executive by David Ritchie, currently group managing direcor.