The company behind the redevelopment of the Preston Barracks site in Brighton remains upbeat about the future, despite the impact of interest rate rises on house price growth.

Developer Wilson Bowden said rate rises were having a calming impact on the property market with competition for sales increasing and deals taking longer to complete.

But the group remained on target to meet expectations for its annual results after turnover surged 21 per cent to a record £592.9 million in the six months to June 30.

Pre-tax profits also improved 29 per cent to £118.2 million.

Chairman David Wilson said: "I believe the strategy we have in place enables us to cope with changing market conditions."

The group's property development division, Wilson Bowden Developments, has been named as preferred bidder for the former Army barracks in Lewes Road, Brighton.

The development includes 412 homes, 40 per cent of them affordable, 20,000sqm of business space and a range of community facilities. More than 1,000 jobs will be generated.

Although rises in the cost of borrowing have taken the heat out of the market, properties have still increased in price by 3.4 per cent on last year, the group said.

It builds houses in about 40 counties in the UK and the property development division is involved in the retail, industrial, leisure and office sectors.

A shortage of land meant competition among house builders was more intense than ever, it reported, and this had driven prices higher.

After factoring in the impact of higher wages and the price of raw materials such as steel, the group said the underlying cost of building a house was seven per cent higher than a year ago.

Wilson Bowden Developments returned to profits growth in the period after completing projects including an extension of Harlow town centre in Essex.

The residential arm, City Homes, finished 100 housing projects during the first half.

Henry Boot Homes, which it acquired in April last year, and Ward Homes were now fully integrated into the mainstream business.

Shareholders are in line to receive a 26.7 per cent increase in the half-year dividend to 9.5p per share.

Thursday September 02, 2004