Housebuilder heads for record profits as it predicts that buyers will return to the market in new year.

Persimmon expects to make record profits for the year end December 31 2004 despite a slowdown in the housing market.

The housebuilder said that house prices had stabilised since May but reported that the slowdown was more acute in the second hand housing market.

In a trading statement the housebuilder said that its completions would rise 2% to 12,400 for 2004 and that average selling price would increase by 11% to £172,000.

Persimmon said that pressures on labour costs had eased considerably for the year and that increases in total build costs would be at a low level despite some material cost pressures.

The housebuilder said that it was well placed in the current trading environment because its broad geographical spread meant it was not exposed to the buy-to-let sector and large city apartments market.

It said that the fundamentals of the housing market were good with low interest rates, good employment prospects and a robust economy.

Persimmon also said that there was a continued under supply in new housing and that the effect of the deferment of purchases' decision to buy a new home suggested an upturn in house sales next year.