House builder Persimmon has announced record profits for 2007 but says it is "cautious" about prospects for the housing market this year.
Persimmon announced record profits for the 12th year in a row
It reported pre-tax profits of £585.1m, up slightly from £582.1m in 2006.
Persimmon said the number of new homes reserved had fallen in the early part of this year.
Whilst the numbers of visitors to its show homes in 2008 was improving, converting those to sales "remained challenging", the company said.
The average selling price for a property rose 1% in 2007 to £189,558, but the number of sales completed fell 4.8% to 15,905.
Persimmon chairman John White said 2007 had been a "challenging year".
The credit crisis hit the company in the autumn of last year, causing customers to cancel house purchases.
However, Persimmon said the number of cancellations had declined and customer sentiment had improved slightly in the past few months following recent cuts in interest rates.
"There remains an underlying demand and desire for new homes but we have been experiencing a period of 'wait and see approach'," the company said.
Persimmon predicted it would have to continue to offer incentives to attract buyers, pushing up marketing costs.