HOUSEBUILDER Barratt Developments said enough buyers were still stepping on to the property ladder for it to meet its annual targets.

Barratt reported encouraging sales interest and activity in all its regions since January as buyers welcomed signs that the housing market had stabilised.

The company is on course for another record year after pre-tax profits rose 20 per cent to £171.1m during the six months to December 31, beating the expectations of analysts.

Forward sales have moved above £1bn again after falling back to £800m at the end of December, which analysts took as a sign of lower sales or a rise in cancellations.

Barratt, based in Newcastle, said the strength of its order book meant it had now secured 90 per cent of its full-year target.

Chairman David Toner said: "While it is too early to predict the market throughout 2005, sales interest and activity in all our regions has been encouraging since January 1 and is currently sufficient for us to achieve our goals."

Barratt completed 6,866 homes during the final six months of last year, which it said was more than any other developer, with the average property selling for £165,600.

Most of these homes were built on brownfield sites.

The company has 8,974 plots in its land bank - enough for four more years of development. Mr Toner said historically low interest rates, good employment levels and supply shortages due to difficulties in the planning system were underpinning the housing market.

"Stable prices - or modest price rises - in the year ahead should continue to increase buyer confidence and improve affordability," he said.

Turnover from its UK housebuilding operations was up five per cent at £1.15bn in the first half.

Barratt increased its interim dividend to 8.99p and expected to make an annual payment 25 per cent higher than a year ago.

The company completed twice as much social housing as a year earlier and announced yesterday that it was one of three consortia chosen to provide new homes for key workers on brownfield land, with an initial phase of 1,000 properties.

Paul Shotter, of broker Charles Stanley, said: "What must also be borne in mind is that this covered a period where media and leading economic indicators frightened sector sentiment and consumer confidence."

Analysts at Barclays echoed the view that these were good results, but said: "Barratt's key weakness is its vulnerability in the event of a downturn in the market - a result of its volume focus and low margins."