John Maunders, the North-west and South of England house-builder, said its margins were under attack as it strived to tempt house purchasers back into the market.
The company sold 1,089 houses in the year to June, against 949 the previous year, but the squeeze on margins meant that profits before tax for the year were up a modest 13 per cent at pounds 7.03m, compared with pounds 6.2m last year.
The company said its average selling price remained similar to last year at just under pounds 70,000 with a part-exchange scheme being used for a quarter of sales. First-time homes accounted for 42 per cent of output.
John Maunders, chairman, does not expect a significant change in market conditions. "It is unrealistic to assume any dramatic change in the market in the short term, but through our marketing incentives we will be able to achieve our targets in the current half, although margins are under pressure.
"Low inflation and interest rates mean the climate has never been better for house buyers," Mr Maunders said, "but there is just a general lack of confidence among potential buyers."
The final dividend is increased from 3.25p from 3.05p, making a total of 5.7p for the year. The shares moved up 1p to 182p.