Homebuilder Crest Nicholson has revealed profits were lower in the first half.
However, the group said the housing market remained steady boosted by high employment levels and low interest rates.
Crest, based in Weybridge, Surrey, yesterday said it had made good progress in the first six months of this year with completions up 20 per cent.
It expects to deliver results in line with expectations.
Crest said group turnover r ose one per cent to £355.1 million in the six months to April 30 while housing revenues lifted 6.8 per cent to £296.2 million.
Pretax profits dropped to £39.2 million compared with £48.9 million a year ago.
The drop in profits was partly due to the increased proportion of affordable housing with the average selling price of a home reduced to £188,000 compared with £208,000 last year, Crest said.
The company forecast prices to rise in the second half leaving the full-year average at £200,000 compared with £225,000 in 2005.
Affordable housing completions rose 72 per cent in the period to 516 units while open market completions lifted just 2.5 per cent to 1,062.
Chief executive Stephen Stone said Crest had already secured 85 per cent of the unit sales required to meet its fullyear target.
"The steps we have taken to improve the business, combined with a steady market and a quality land bank, give us confidence that Crest is on a path of improving perform-ance, which will deliver results in line with expectations," he said.
Mixed-use commercial sales were expected to be around one third lower in the full-year mainly due to planning delays in one of its projects, Crest said.
Crest is developing the Park Central scheme at Birmingham's Attwood Green, a project which will eventually include a new park and up to 1,800 new apartments.
The Birmingham Post has previously reported how a £14 million investment in two new sites is this year spear-heading Crest's growth in the region.
The luxury developments at Sutton Coldfield take the company's regional portfolio past the 13 mark.
They also highlight the demand for contemporary living outside city centres, a trend that the company has already enjoyed success with at Bournville, Kenilworth and Wythall.
Crest, which last year rejected an indicative offer from Heron pitched at between 345-430 pence a share, said it was not aware of any fresh bid interest, but admitted that its shares were trading at a "significant premium" reflecting continued takeover speculation in the stock.
Apart from Heron, Crest has been touted as a potential bid target for Barratt Developments and Bovis Homes.
"If we had anything to say regarding a bid or an approach then we would announce it," C rest's chief executive Stephen Stone said.
Recent reports suggested that Bovis could be looking to buy Heron's 23.4 per cent stake at around 620 pence a share - a value of almost £700 million.
Shares closed up 0.75p at 516.