HOUSEBUILDER Barratt Developments posted record annual profits yesterday - but resisted the temptation to forecast a pick-up in the property market.

Newcastle-based Barratt said it was working on the assumption that the market would remain challenging and it did not intend to push up volumes in the next financial year.

But investors were assured that the firm could respond by marketing more houses if last month's cut in interest rates sparked the economy into life.

Barratt said its uncompleted sales now totalled £900m and this represented 52 per cent of its target for the full year.

The update came as the firm reported profits of £406.6m for the year to June 30, which was 11 per cent ahead of a year ago and higher than the £390m expected in the City.

Turnover was marginally lower at £2.51bn for a period that chief executive David Pretty described as "one of the most challenging for years".

But the market remained on a solid foundation with good levels of employment and low interest rates supported by a shortage of housing, he said.

More homes were built in total, and more homes on brownfield land, than by any other housebuilder, Mr Pretty said.

Average selling prices increased by four per cent to £172,200, but total private completions were down one per cent, albeit with a higher selling price.

Vinay Bedi, director at Wise Speke investment management firm's Newcastle office, said: "From an investor's perspective, the fact that the group is increasing profits when sales are struggling to grow is a basic indicator of a well run and attractive business.

"The question we must now be asking is whether this trend can continue?"