Chairman Sir Nigel Mobbs said falling interest rates in the second half of 1998 helped to stabilise wavering confidence after a strong first six months.
He said he thought lower European interest rates should help to keep UK interest rates low, and that affordability of homes should remain strong. This is because inflation is also expected to remain low.
Bovis Homes' operating margin rose 25% to 19.3%. Chief executive Malcolm Harris said this reflected improved specification, skilful marketing, good land management, strong cost controls and value engineering across the group.
Margins were best in retirement homes; they were also much stronger in the South-east than in the Midlands and South-west. Bovis Homes' average selling price increased from £92 600 in 1997 to £96 800.
The firm is planning to expand into the north of England, and will be opening an office in the wealthy Manchester suburb of Wilmslow next month.
Shares in the firm rose to 273.5p, but Bovis is still seeking approval to buy back 10% of its shares in the event of its stock market value falling below its net value asset.
