The company said that demand for new houses was outstripping supply.

We're still seeing house prices rise in many areas but they're not as dramatic as they were last year

Duncan Davidson Persimmon

And with interest rates at low levels it said there was no sign of a decline.

Persimmon's profits rose by nearly two-thirds to �111.8m ($170.7m) in the first six months of the year.

And the UK's biggest housebuilder said that orders for the second half of this year were at their strongest.

The average selling price is now �134,431, compared with �119,645 in 2001.

Slowing down

Persimmon's chairman, Duncan Davidson, told BBC News: "We're still seeing house prices rise in many areas but they're not as dramatic as they were last year, particularly in the south-east and London.

"Quite frankly we're pleased about that because the increases that we were seeing last year were really getting pretty high by our reckoning," he added.

Mr Davidson said he thought that prices for his company's new homes would rise by about 10 or 11% over 2002.

Persimmon took over its rival, Beazer last year, and its other brands include Charles Church.

Latest figures for the whole of the UK housing market show that house prices have slowed.

The research group Hometrack found that the average UK house price rose by just 0.7% in August.

Hometrack said the housing market had now taken a "reality check" and growth had fallen back substantially since the leap of 2.6% in May.

The group said that so far in 2002 house prices had risen by an average of 12.6%.