Housebuilder says that interest rate rises have taken the heat out of the housing market but says demand is still outstripping supply.

Bovis Homes’ pre-tax profit has risen 46% to £67.2m for the six months ended 30 June 2004.

The housebuilder said that strong demand in the first half of the year helped boost the average sales price from £190,800 to £206,500 even though the average size of each home fell by 1.8%.

Bovis said that house price rises in the second half of the year will moderate because of recent interest rate rises. The group said that it believed land prices had reached their peak and would be more cautious about buying land with planning consent.

Despite the warning Bovis said the fundamentals of the housing market remained solid and said that despite the interest rate hike demand was still exceeding supply of new housing.

Chief executive Malcolm Harris said: “The group has delivered a strong set of results for the six month period with further progress made relating to the objective of moving towards a more even weighting of profits between the half and full year trading periods.”

The increase of profits was generated form a turnover of £271.7m up from £190.6m a year ago. Iinterim dividend increased by 21% to 6.4p per share.