Urban housebuilder says that profit will be significantly lower than last year after summer of depressed housing sales in the South East.

Countryside Properties has issued a profit warning after a drop in sales of lower priced homes in the South East.

The Group said that profits for the year end 30 September 2004 would be well below those achieved last financial year.

The news comes three weeks after chairman Alan Cherry and a group of executive directors made a preliminary aproach to the Board about a possible management buyout. The Group said the executive directors involved continued to make progress with their iniative but added that there is no certainty that any offer will be made.

Countryside said that the market for homes had weakened over the summer following five consecutive increases in interest rates. The Group said that the slow down was particularly marked for homes over £300,000, and was becoming more pronounced for lower priced homes in the South East.

Profit will also be hit by a number of construction delays, and Countryside said that it would be completing just under 950 homes for the period. It said that the margins on a number of sites had suffered as a result of the market slowdown.

Countryside also blamed planning and technical delays for a lower than expected number of land sales for the financial year. It said that some buyers had tried to take advantage of the approaching year end and the possible MBO by making low bids. The management said it was not prepared to sell the land at discounted rates, and as a result less land than envisaged will be sold for the year.