The severity of the housing slump has been underlined by a 58 per cent sales plunge at building firm Redrow.

The national company with developments in Kent spoke of "unprecedented market conditions" as it posted pre-tax losses of £46.2m for the six months ending December 31, compared to a £35.8m profit in the same period in 2007,

Sales fell to £149.1m (£353.1m). The average selling price dipped from £162,700 to £140,500.

Redrow said it was aiming to cut costs by £40m, and had already reduced its headcount by 43 per cent to 740. Further job losses of 90 would lead to the total workforce declining to 650.

The builder said markets were "very challenging" and reservations were down 49 per cent. Cancellation rates ran at 27 per cent, an increase it blamed on redundancies and employment concerns.

Redrow said a marked reduction in the availability of mortgage finance had been "strongly felt."

One bright spot was a rise in the number of people viewing properties and making reservations in the first few weeks of 2009.

Redrow chairman Alan Bowkett said: "Redrow responded early to the unprecedented market conditions, taking swift and decisive action within the business. We have implemented a major cost reduction programme which is delivering significant savings and we are executing tight control of our cash flows."

He added: "Our strategy in the medium term remains focused on the strength of our forward land bank and the delivery of differentiated product to our customers. This will best position the company to be able to deliver value for shareholders once market conditions improve."

Redrow said the economic situation had deteriorated in recent months and was likely to remain "very challenging" for the remainder of 2009. "We are cautious as to the propects for 2010," it added.

The "spectre of unemployment" was increasing and that was likely to restrain confidence. Redrow’s dismal figures echo those of other housebuilders, including Kent-based Bovis.

Last week, the Council of Mortgage Lenders reported that repossessions had soared to a 12-year high of 40,000.