Barratt Developments today said it expects the housing market to remain firm, bolstered by "a continuing serious shortage of new homes" resulting from Britain's "very slow planning system".

The comments came as the UK's largest housebuilder unveiled a 3.4 per cent increase in full year profits, to £391.4 million, beating analyst expectations of around £380 million.

Presenting his last set of results after 27 years at the company, chief executive David Pretty said he was leaving the firm in a strong position.

He said "Notwithstanding general concerns about interest rate trends, [the company's] record forward sales position, combined with our strengthened land bank and robust balance sheet, puts us in a healthy position for another year of progress."

Forward sales grew 27 per cent to £1.14 billion, compared with a year earlier.

The solid profits figures came despite Barratt's average selling prices falling 4 per cent as it built more state-funded projects and homes aimed at first-time buyers. Sales fell 2.1 per cent to £2.43 billion, from a year earlier.

Analysts said the performance was driven by a better than expected operating margin at 16.7 per cent, up from 16 per cent last year, but warned margin pressures could mount in the next financial year.

Analysts from Dresdner Kleinwort said in a note this morning: "Barratt has been one of the most robust housebuilders ... It is, however, more exposed than most to flats and appears to be actively chasing the relatively fickle investment market."

Shares in Barratt were up 2.2 per cent or 22.5p at 1,045p in morning trading. To track the stock click here.

The final dividend was 31.03p, up 15 per cent on a year earlier.

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