by business editor Trevor Sturgess

Bovis, the Kent-based housebuilder, has reported signs of improvement in the housing market.

In a trading update covering the first six months of the year, the company, with a head office in New Ash Green, near Gravesend, said conditions had been challenging but it was on course for a pre-tax profit as the market showed "signs of stabilisation."

The Bovis Group's more upbeat assessment follows similarly positive recent reports from other housebuilders, including Persimmon and Redrow.

Bovis said the short term outlook for the housing market was "a continuation of low levels of activity" constrained by a shortage of mortgage finance. "House prices appear to be demonstrating a degree of stability at present, aided by the current low level of second hand homes being offered for sale across the housing market."

House price data indicated that the rate of price decline had slowed and the number of mortgage approvals had risen, albeit from a low base.

However, Bovis said that sales remained at "historically low levels" with prices substantially below the peak levels of late 2007.

In a statement, it said: "The continuing lack of mortgage availability, particularly for first time buyers of newly built homes, has been challenging for the Group during the first six months of 2009."

But it added that the group had met the challenge and raised sales by "competitive pricing," new sales organisation and first time incentives to help first time buyers. It has also made sales to housing associations.

Bovis is not paying an interim dividend. Ed Woolfitt, head of trading at Galvan, said the Bovis statement was "further evidence of a bottoming out in the housing market. While some problems still lie ahead, based on the clutch of sector trading statements this week, the collective view is that the housing market and sales are slowly but surely on the turn.

"Bovis now looks lean and mean enough to offer some recovery upside to patient investors, and in the near term the shares could well move nearer the top of the recent trading range back over 400p."

Bovis completed sales of 754 homes, down 11 per cent. The average price of homes sold was £160,400 compared to £196,700 in the first six months of 2008 and £164,700 in the second half of 2008.

Including social and partnership homes, the average sales price £159,700 compared with £167,600 in the first half of 2008. The group said it had reduced its stock of unsold homes, leaving unsold finished stock at around 480 homes.

Bovis has cut costs, jobs and debt, with overheads at £13m some 45 per cent lower than the same period in 2008.