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An interest rate cut is needed to restore the weak housing market, the head of Bovis Homes said in the company's results statement.

Bovis Homes posted pre-tax profit of £123.6 million for 2007, compared to £132 million for 2006, on revenues of £555.7 million.

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

"Cumulative sales reservations for 2008 to March 7th 2008 are 1,262 as compared to 1,582 at the same point in the previous 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."

The average sales price of private homes grew by 3.8 per cent year against year.

However, the overall average sales price fell by 2.3 per cent, from £183,700 in 2006 to £179,500 in 2007.

The main factor behind this movement was mix, with social housing taking a greater proportion of the whole in 2007, as compared to 2006.

The board is proposing a dividend of 17.5p per share. The group's total dividend for 2007 is 35p per share, a year on year increase of 16.7 per cent.

Bovis said the housing market during 2007 has been impacted by the tightening of interest rates over the first half of 2007, and then the banking crisis during the second half, which has had an impact in terms both of availability of credit and consumer confidence.