Barratt Developments saw profits over the last year drop 68 per cent as the builder was hit by to morbid property market.

The builder revealed today it was hit on three fronts – in a property/mortgage crunch pincer movement – as demand for new homes fell, prices dropped and the value of land it owns was down.

Profit before tax at the Barratt stood at £137.3 million for the 12 months to the end of June, compared to £424.8 million a year ago.

On a like for like basis, completions were down 13.8 per cent for the builder, to 18,588.

Average selling prices rose by six per cent to £183,100 – as the firm sold more premium properties in London. Without this shift, average selling prices were down five per cent.

Mark Clare, group chief executive of Barratt Developments, said: “Whilst we have produced a satisfactory set of results in an extremely challenging market, there is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return.

“In the meantime, we have successfully refinanced our business. Our focus today and looking forward is to maximise sales revenues, reduce costs and generate cash to reduce debt.”

Mr Clare added there remained “considerable uncertainty” about the near-term prospects for the construction sector.

“Whilst market conditions during the first two months of the new financial year have been broadly stable, they remain extremely challenging,” he added:

“In the last four weeks net private sales rates have been down around 30 per cent on prior year. Pricing continues to be under pressure with higher incentive levels being required. Whilst we will deliver further cost savings during the year, we expect to see downward pressure on margins.”