UK housebuilder Barratt Developments has reported a steep fall in profits as the property slump begins to bite.

The firm, which is cutting more than 1,000 jobs, said profit before tax totalled £137.3m in the year to 30 June, down 68% from a year earlier.

But Barratt said in light of “the extremely challenging market”, the results were satisfactory.

The firm said its average selling price had risen 6% because of high-value sales in upscale London locations.

“There is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return,” said the firm’s chief executive Mark Clare.

Barratt, like many housebuilders, is suffering as both house and land prices fall.

Barratt was forced to write down the value of its land and work in progress by £208.4m, following a fall in prices.

The firm also sustained £15.9m of reorganisation costs, including redundancies, however this figure did not include the costs related to the 1,200 jobs cuts announced in July.

“Given the performance of the business for the full year and the board’s view on the outlook for the current year, no final dividend for 2007/8 will be paid,” it announced.

News reported by The BBC