Builders warn on profits on housing market woes

By Dan Lalor

LONDON (Reuters) - Two builders warned investors their results are being hit by a sharp slowdown in the housing sector this spring, as an industry survey on Tuesday reported the most widespread downturn in at least 30 years.

Redrow said reservations in 2008 were down 50 percent year-on-year. Among those reservations, cancellations had been running at just over 20 percent but "we have experienced a marked increase since Easter.

"It is becoming increasingly difficult to predict accurately reservation and cancellation rates," said Redrow, which pinned the blame on a severe restriction in the availability of mortgage finance, as do many commentators.

Unlike a previous housing downturn which began in the late 1980s, interest rates are relatively low and employment is historically high. But the credit crisis has hit consumer sentiment and led to the withdrawal of many mortgage offers.

Separately, Galliford Try said its full-year profit would be at least 60 million pounds, significantly below the 76.6 million pounds pencilled in by analysts, according to Reuters Estimates.

The company said while the housebuilding market had been difficult throughout the spring, "in recent weeks they have shown a further sharp deterioration as the availability of mortgage finance for homebuyers has reduced".

At 9:30 a.m., Galliford Try shares were down 1.3 percent at 57.25 pence, with Redrow shares off 3.0 percent at 284 pence in a rising market.

The bleak messages from Galliford Try and Redrow reinforced a Royal Institution of Chartered Surveyors (RICS) report that found house prices fell in every region in April.