Housebuilder Bovis Homes has called for the Government to immediately reduce interest rates in order to save the dwindling new build property market.

Chief executive Malcolm Harris warned that without lower rates bringing calm to the mortgage market, Bovis Homes will see a considerable drop in property sales in 2008.

The grave outlook came as Bovis reported a 9% drop in annual pre-tax profit to £123.6 million. The company blamed the drop in earnings on first-time buyers finding it harder to borrow money.

A greater number of Bovis's properties went into the social housing market, bringing down its average sales price by 2.3%. Private home sales actually gained by 3.8% in price in the year.

The Government wants to see more homes built in the UK than are current construction rates. Unfortunately, this goal is being hampered by financing pressures, where credit is less available to consumers. Confidence in wanting to buy a property has also dwindled in light of economic uncertainty.

Harris said the spring selling season will provide a good indication of how the property market will span out for the 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,' warned Harris.

More than £800 million has been wiped off Bovis' market valuation since April 2007. Its share price has fallen by 55% to 641.6p, amid a wider downturn in house building stocks which have fallen heavily in the past year.

Persimmon could become the only house builder left in the FTSE 100 after the latest quarterly index reshuffle, to be announced on Wednesday. Barratt lost its place in December and Taylor Wimpey is set to be demoted to the FTSE 250 this week after a 66% fall in its share price since April.