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The housing market had already been slowing for some months before Northern Rock's woes, where five quarter-point rises in interest rates over the past year had made house-buying less affordable.

UK mortgage lenders had also been tightening their lending criteria over the past three months as they grappled with the higher costs of short term borrowing caused by the collapse in the US sub-prime mortgage market - lending to those on low incomes or with poor credit histories.

Despite the past week's sales slide, Barratt's forward sales position has now grown to £1.721 billion which together with completions to date means it has secured 53.8 per cent of its full year target.

Annual figures out today reveal Barratt was sitting on a record forward order book of sales at its 30 June year end, up 67.3 per cent to £1.4 billion, boosted by its £2.2 billion takeover of Wilson Bowden earlier this year. That figure was still 14.8 percent higher than the proforma combined Barratt and Bowden businesses.

The number of houses sold rose 17.6 per cent to 17,168 in the year to June 30, the group revealed today, with the average selling price up 4.2 per cent, from £165,800 to £172,800. However, operating margins from housebuilding weakened from 17 per cent to 16.7 per cent.

The London housing market remains particularly strong, Mr Clare said, where the company is due within weeks to start marketing over a dozen huge flats on the Bishops Avenue, down from Hampstead Heath, with some expected to sell for £10 million or more each.

Pre-tax profits rose 9.3 per cent to £427.8 million on turnover up 25 per cent to £3 billion.

Mr Clare's long-term confidence is reflected in the 15 per cent rise in the full year dividend to 35.68p.

But Colette Ord, analyst at Numis Securities, said that although the group's full-year results beat forecasts, she expects City forecasts to cut their predictions for the current financial year after today's cautious update in the wake of the credit squeeze.

Integration of Wilson Bowden is running ahead of plan prompting the company to expect savings of £30 million in the first full year post acquisition and at least £60 million in the second year, up from the previous targets of respectively £25 million and £45 million when the deal was announced.

Barratt has cut better deals with materials suppliers as a larger operator and cut 400 jobs as forewarned, after ridding of duplicate head office staff and the closure of 10 smaller regional divisions.

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