Housebuilder Bellway says its focus on the lower to middle housing market has helped to push sales up 1% in the first half of the financial year.

It sold 2958 homes at an average price of £168,000 in the six months to 31 January.

In a trading update chief executive John Watson said there had been an upturn in buyer confidence since Christmas. However, he added: "Sales incentives continue to be employed to encourage home buyers to commit to a purchase and this has put modest pressure on margins, although not to the extent previously envisaged."

He said the order book was £562m and that an anticipated 12% increase in the number of sales outlets to 220 by the summer put it in a strong position for the 2006/7 financial year.

It was recently appointed to build more than 5000 homes as part of a regeneration project in Leeds. Shares rose 15p to 1180p after the update.