Persimmon says housing demand is picking up

The firm added that trading since the start of the year had been good, and it was anticipating a steady rise in house prices this year as demand picked up.

Persimmon posted annual pre-tax profits of �495.4m ($866.2m) for 2005, up by 5.9% on the previous year.

The York-based firm said it had sold 12,636 homes last year, up 2% on 2004, at an average price of �180,892.

I think we'll see a steady increase in selling prices during the current year Duncan Davidson, Persimmon chairman See Persimmon's share price

"Persimmon has seen really quite an improvement in the market since the new year," chairman Duncan Davidson told the BBC.

"I think we'll see a steady increase in selling prices during the current year because the demand is picking up."

The slowdown in house price growth last year has hit profits at some of Persimmon's rivals.

Last week George Wimpey said underlying profits had fallen 16% after it increased incentives to lift sales.

Persimmon completed the acquisition of smaller rival Westbury in January and said that the integration of the business was going well.

It said it had closed eight of Westbury's 10 offices which had led to about 500 people leaving the firm.

Persimmon estimates the savings from integrating Westbury will be �25m this year and about �40m from 2007 onwards.