LOW-cost homes builder Bellway posted record profits yesterday as it remained upbeat about the coming year despite a slowdown in the housing market.

Pre-tax profits were up 6.2 per cent to £218.2m as the Newcastle-based company announced 7.8 per cent turnover growth for the 12 months to the end of July.

Bellway said that business in the first two months of the financial year was up four per cent on the same period last year, although the chairman of the company acknowledged that it had been a more difficult time in the housing market.

Chairman Howard Dawe said: "Despite testing market conditions, Bellway has recorded its 14th successive year of volume growth.

"Home sales increased and the group's average selling price, up 1.5 per cent at £163,800, remains one of the lowest and most affordable in the industry."

He added that despite the challenging nature of the market -a situation expected to remain for some time to come - the company remained confident about its future prospects, his confidence bolstered by the healthy state of the order book.

He said the group "continues to implement its policy of forward selling wherever possible and this is reflected in an order book of £513m at 31 July, 2005".

Bellway's North-East division continued to trade well, working on a wide range of developments from detached family houses to city centre apartments in locations across the region.

Anthony Platts, assistant director at Tees Valley investment managers Wise Speke said: "Bellway can now boast sales of over 7,000 homes a year which indicates that its simple objective of selling as many houses as possible is being achieved.

"Indeed, reservations for new houses are up already for the current year, and this progress is being reflected in the large increases in the dividend that the board is proposing.

"All good news for shareholders, so long as progress can be maintained in a challenging market.

"We continue to take the positive view.

"The group remains one of the quality players within the sector and management has demonstrated it can consistently deliver."

Bellway's North-East division is working on several housing developments in the region, including West Park, on West Auckland Road, in Darlington; Bramley Green, in Stockton, and the Bishop Cuthbert development, at Moorhen Road, Hartlepool.

Bellway North-East managing director Barry Miller said: "Despite changes in the housing market in the last 12 months, people have continued to search for high quality new-build properties.