Galliford Try, the housebuilder and construction company that is rebuilding Wimbledon's Centre Court, has given warning that the downturn that has brought the housing market to its knees is beginning to spread to private sector commercial construction.

The company, which reported record pre-tax profits this year before the impact of land writedowns, said there were signs that demand from the private commercial sector for new buildings was dropping off because of the economic slowdown.

After exceptionals, Galliford's pre-tax profits for the year to the end of June were flat at £60.3 million, on revenue up 30 per cent at £1.8 billion.

The construction company, which is also building the infrastructure for the Olympic Park in East London, said it expected that in the coming year that the strongest flow of work would come from the public sector and regulated industries, such as the water sector.

Some 87 per cent of its £1.9 billion forward order book was accounted for by public and regulated sector work.

Like rival housebuilders, Galliford Try has had to restructure its housebuilding business to cope with the downturn in the market, which worsened this spring.

Profit from operations in the housebuilding division was up 22 per cent at £44.1 million. However, margins fell from 14.5 per cent in 2007 to 11.1 per cent this year as the company stepped up its sales incentives.

The company said its new house selling prices have dropped by between 18 and 20 per cent from their peak in May 2007, with housing in London and the South East outperforming the rest of the country.

However, some sites are 30 per cent down and others just 5 per cent down, the company said. The weakest part of the market is high-rise apartments in northern cities.

Visitor levels to sites have fallen by 15 per cent in the first two months of the current year. However, the cancellation rate has reduced from a peak of over 60 per cent in the spring, to around 20 per cent.

Galliford Try has cut staff and stopped buying land to cope with the market downturn and is keeping a close watch on its cash and debt levels.

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