John Watson, chief executive of housebuilder Bellway, played down fears of a market meltdown as it posted a 6.4% rise in pre-tax profit to £234.8m for the year ending 31 July 2007.

Watson said: “There has been a slight cooling since the Northern Rock crisis. Our sales were down 4% in the past 10 weeks, but I think confidence will rekindle.”

He said his order book was contained work worth £667m, compared with £647m last year.

Bellway, capitalised at about £1.2bn, is often seen as a takeover target but Watson said he was interested in acquiring some smaller housebuilders.

Margins slipped to 0.6% to 18.7% and he expected further erosion next year of 0.2-0.8%.