Housebuilder Ben Bailey has reported a drop in profits of almost 20% in a further sign of the struggling housing market.

The housebuilder鈥檚 pre-tax profit was 拢6.2m for the six months ended 30 June, 18% lower than its 2004 figure of 拢7.5m. The drop occurred despite a 21% rise in turnover to 拢45m across the same period. The dividend remained unchanged at 5p.

Chairman Richard Bailey expressed disappointment at the results, saying early optimism had not been met.

He said: 鈥淭he optimistic view held in the early months of the year failed to be fulfilled after the election. There has been a need to employ more sales incentives to maintain volume output and an efficient build programme.

Improvement will depend on customer confidence

Richard Bailey, chairman

Increases in costs of materials and labour have also contributed to a decline.

鈥淭he subdued market conditions will continue to affect margins and any improvement will depend upon a return of customer confidence, possibly driven by a reduction in interest rates.鈥�