George Wimpey, Britain’s fourth-largest housebuilder, is gearing up for an attack on the UK first-time buyer market with sales of about 400 compact flats this year priced as low as £60,000.

The roll-out of a new range of affordable homes, all sufficiently cheap for buyers to escape paying stamp duty, will see Wimpey go head to head with rivals Barratt Developments and Redrow in the battle to dominate the lucrative first-time buyer market.

At the same time Peter Redfern, the Wimpey chief executive, said that he was also ready to increase spending on land to more than £1 billion a year to replenish the company’s housing stock after pulling out of the £2 billion bid battle for Wilson Bowden last month.

Delivering forecast-busting 2006 figures, Mr Redfern said he felt no time pressure to buy any other UK rivals but was on the lookout for bolt-on buys of smaller US regional housebuilders to add to the firm’s Morrison Homes division.

In the near term Wimpey is focusing its sights on getting planning permission on eight new sites for its G2 homes, starting with an expected sale this June of 36 flats in Redcar, followed within weeks by 60 more in Liverpool and another 60 in Maidstone, Kent by last summer.

Analysts took heart from the strong improvement in second-half margins from Wimpey’s core UK business which hit 14.3 per cent compared with margins of 12.7 per cent in the first half.

Gearing is at 23 per cent, the lowest for six years leaving plenty of room for Wimpey to spend hundreds of millions of pounds more than the £900 million spent last year on land and still affrord to bite off a large acquisition of a rival.

Operating profits from the UK business to the end of December rose 14 per cent to £317.6 million on an 11 per cent rise in revenue to £2.39 billion. Total UK completions rose 13 per cent to 13,616 homes.

Group revenue rose 5 per cent to £3.147 billion, while pretax profits fell 15 per cent to £310.2 million after a one-off £60.7 million writedown of US land inventories, as warned in December.

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