Barratt Developments said today it expected its number of sites to decline as it responds to a "significant" deterioration in market conditions.

The group said new projects were only being started on a highly selective basis and where it has clear visibility of demand and work-in-progress can be tightly controlled.

In a trading update, Barratt said its forward order book currently stood at around £1.56 billion, compared with £2.1 billion seen a year earlier. It said it was seeing greater pricing pressure across all regions and that sales incentives were being required to stimulate demand.

Barratt added: "Current market conditions are impacting to varying degrees on regional performance, with the Midlands and West worst affected, whilst the London and South East markets are proving to be relatively more resilient.

"The group continues to benefit from a broad geographic and product mix and a targeted exposure to the London market."

Barratt briefly became the UK's biggest housebuilder following last year's £2.2 billion acquisition of Wilson Bowden, but dropped out of the FTSE 100 Index in December as its shares were hit by the credit crunch.