HOUSEBUILDER Barratt Developments yesterday predicted a bright short-term future for the group - but said it was unclear how long the housing market would take to recover from recent interest rate rises and the impact of the credit market crisis.

Housebuyer confidence has been hit by the squeeze in debt markets as mortgage banks tightened their lending criteria, according to the Newcastle group.

But Barratt said it hoped demand would continue to outstrip supply in the UK as it posted underlying full-year profits that were up by 16 per cent to £454m.

Barratt, which bought rival Wilson Bowden for £2.2bn in February, said it would make £20m more in cost savings from the acquisition than originally thought.

The UK's second-biggest housebuilder hopes to cut costs by £90m in the first full two years after the deal, up from £70m.

Barratt said the additional savings would not mean further redundancies following the first round of about 400 job cuts - including in Newcastle - after the takeover.

The group said combined forward sales were 15 per cent ahead of the previous year at £1.41bn, also taking into account last year's figures from Wilson Bowden. The number of new houses completed increased 18 per cent to 17,168.

But despite the optimistic outlook, Barratt warned of tougher times ahead. In a statement to the Stock Exchange, it said: "It is not yet clear how quickly the market will recover, but we have to assume there will be downward pressure on volumes and price inflation in the short-term."