Housebuilder Bovis Homes posted a 32 per cent fall in half-year profit yesterday - hit by lower sales of its larger four-to- five bedroom houses.
The group said the housing market remained hostage to poor consumer confidence.
Bovis, a specialist in midmarket suburban and commuter-belt housing, said consumers were finding it tough to sell existing homes to trade up to bigger properties and it would look to sell smaller properties to make up sales volumes.
Malcolm Harris, chief executive, said: "It's still cheaper to buy than to rent in most parts of the country. Therefore affordability is not the issue.
"It is really confidence and the ability of people to sell them ( houses) into the second-hand market. It is taking a lot longer for the (seller-buyer) chains to complete and it is that which has really affected our volume and our profit for the first six months of the year."
The housing sector has slowed considerably over the past 12 months as many buyers were scared off by high house prices, a series of interest- rate hikes and repeated warnings that the market was overheated.
The Bank of England cut interest rates for the first time in two years last month, raising hopes it could spur a housing market recovery.
Bovis said the interest rate cut was yet to have a noticeable effect.
Some of the company's rivals have reported falling profits in recent weeks. Last week, Taylor Woodrow and George Wimpey reported a three per cent and 21 per cent drop in first-half profits respectively and said they were looking at markets other than Britain for growth.
Bovis said its pretax profit for the six months to June 30 fell to £45.1 million from £66.8 million a year earlier.
The group, for whom the slowdown has been made worse by the lack of a large forward order book, sold 16 per cent fewer homes in the first half, but said it hoped to reverse that in the second period by selling smaller and more affordable properties.
Mr Harris said Bovis aimed to end 2005 with sales volumes higher than in 2004 and added that the company was also reconsidering its strategy on building up a strong forward order book, which has helped some of its rivals.
He said that while volumes would benefit from the availability of smaller and more affordable properties, average sales prices for 2005 would be lower than in 2004. "We would need to sell two 2-bedroom units to make for one 4-bed."
Mark Hughes, Numis Securities analyst, said: "This increase in volumes is likely to result from a less profitable product mix." Numis cut its pretax profit forecast for 2005 to £ 124.4 million from £134.1 million.
Bovis raised its interim dividend 30 per cent to 8.3p a share and said it was sticking to its target to increase the full year dividend to 25p, followed by a 5p increase each year over the next three years to 2008. Bovis shares were down 15p at 602p.