Countrywide remained upbeat over signs that the housing market was picking up, despite reporting a 21 per cent slump in profits.
The group said its estate agency business experienced a "significant turnaround in profitability" during the second half of 2005 after a difficult start.
It said the improvement in the residential market continued this year, with fees from sales running 35 per cent higher in the first two months of 2006 than early last year.
But the turnaround was not enough with operating profits at the estate agency division falling by 62 per cent to £9.4 million for the full year, news which saw the share price fall 9.25p at 483.75p.
A 39 per cent slide in group o perating profits to £31.9 million resulted with pretax profits 21 per cent lower at £31.4 million.
In August the group reported its first operating loss in ten years after seeing house sales fall by a third.
The UK'S largest estate agent, Countrywide is planning a waterside village on the site of Birmingham's old Tower Ballroom and has offices of Dixons and Bairstow Eves in the West Midlands.
The company's conveyancing division contributed to lower profits by writing-off £5.5 million after abandoning a new computer system.
Chairman Christopher Sporborg said: "In the second half, turnover increased, whilst the estate agency business experienced a significant turnaround in profitability."
The firm said the net fee value of new sales through its estate agency offices in the first two months of the year was 35 per cent higher than in the same month a year ago.
Property prices on homes exchanged in the first two months of 2006 also rose 5.1 per cent, while commission rates averaged 1.7 per cent per transaction, against 1.6 per cent a year ago.
Countrywide is the latest of a series of firms talking of recovery in a market in the doldrums since mid-2004 as buyers were deterred by high prices, interest rate increases and repeated warnings.
Housebuilders report improved confidence and increased visitors after an interest rate cut in August by the Bank of England.
Countrywide one of Right-move's main shareholders said the flotation of Britain's biggest property website last
week appeared successful and had already realised a profit of £16.5 million.
It said its remaining stake, which priced its share sale at the top end of expectations, was worth £95.5 million.
The number of English households is expected to jump a fifth in 20 years, more than previously thought, new government projections show, in a sign housing demand should underpin prices.
The Office of the Deputy Prime Minister predicted on Tuesday there would be 25.7 million households in 2026 compared with 20.9 million in 2003. It projected a sharp 53 per cent rise in the number of one-person households.
E conomists said such growth would further stretch supply and should underpin house price inflation which has only recently slowed from double-digit increases.
"It's indicative of strong underlying demand for housing relative to supply and it's supportive of the view you will not get a major correction," said Dominic Bryant, economist at BNP Paribas.
Housing Minister Yvette Cooper said projections under-lined the need for more housing to prevent affordability being stretched further.
"We have an ageing, growing population with more people alone and if we don't build more homes we will see house prices rise further pushing out first time buyers," she said.