BIGGER homes and city living are the future for housebuilder Bellway.

That was the message from the Newcastle builder, the UK's fifth largest, as it reported a 15 per cent rise in pre-tax profits to £35.1m in the six months to January 31.

Managing director Barrie Miller said that while sales of traditional executive homes remained buoyant, the regional preference was towards bigger and more expensive properties.

He said: "Demand is rising for homes in excess of £400,000 and we are already looking to build houses with internal areas of over 3,600 square feet.

"Demand exceeds supply at the present, with houses of this value being snapped up by managing directors, company directors and people from the south of the country cherry picking properties in the North."

During the six-month period Bellway sold 2,269 homes at an average selling price of £117,900, compared with 2,197 homes at an average price of £106,000 in the previous six months.

The company claimed there was still a high level of interest from homebuyers, although this is being tempered by a lack of availability of homes to sell.

Mr Miller said: "This has been due to delays in the anticipated start dates of new developments, caused by protracted planning systems, further exacerbated by the weather.

"Consequently, the number of homes sold this year is expected to be similar to last year's performance, but with higher selling prices."

In response to changes in Government legislation, brownfield developments comprise 60 per cent of Bellway's annual build in the UK.

It is about to start work on a major development in the centre of Newcastle.

Shareholders will receive an interim dividend of 4.1p per share, a 14 per cent increase.