Barratt Developments, Britain's second-biggest housebuilder by volume, reported yesterday that full-year profits fell by 71% as the year-long credit crunch depressed sales in the second half and warned it sees no improvement in the market in coming months.

The company reported a net profit of £86.4m for the year ending June 30, compared to £298.3m in the previous year.

Profit before tax was £137.3m, well down from the £424.8m recorded in the previous period.

Barratt wrote down the value of its land holdings by £208.4m. Revenue rose by 16.7% to £3.55bn.

The Newcastle-based company also confirmed it was not paying a final dividend, leaving shareholders with just the 12.23p interim payment.

Chief executive Mark Clare said "there is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return.

"Our focus today and looking forward is to maximise sales revenues, reduce costs and generate cash to reduce debt."

The group announced a raft of measures to stimulate sales that have been hit hard by the worst slump in about 30 years. Recent reports have shown average house prices in Britain falling by more than 10% in the last year.

Barratt is offering incentives including the scrapping of stamp duty on properties worth up to £500,000, paying up to £1000 a month of a customer's mortgage till 2010 and allowing new purchasers to pay only 85% of the price immediately with the rest being paid over the next 10 years.

In addition, the group is promising to shoulder up to 15% of any loss on a house bought from the company but sold during a three-year period, as well as paying moving costs and offering to help people move up the housing ladder by buying their old home off them in a part-exchange.

Barratt's new incentives follow the government's decision to raise the stamp duty ceiling to £175,000 last week, which the builder deemed "well below the value of many modern homes".

Barratt's profits dropped, although the average selling price of homes rose 6% to £183,100, reflecting more sales of properties in "premium" London locations.

The company said sales fell markedly in the second half of the year, following the near-collapse of Newcastle-based mortgage lender Northern Rock and a reduced availability of home loans.

Barratt shares fell by a half-penny to 156p in yesterday's dealing on the London Stock Exchange.

"The current selling position actually looks a little better than that reported by its peer group," said KBC Peel Hunt analyst Robin Hardy in a research note. "This does reflect that Barratt is head and shoulders the best in the sector at selling and generally gets more bang' for each marketing buck." Hardy has no rating on Barratt's shares.

Barratt is cutting around 1200 jobs to cope with the housing market downturn. Rivals such as Taylor Wimpey and Redrow have also announced hefty job losses.

Barratt said its net debt was £1.65bn at the end of June - primarily due to its Wilson Bowden acquisition last year. The firm recently agreed new banking terms, including the extension of £350m of credit to help it cope with the tougher market.

Clare said: "With the successful refinancing of the business, a good deal of the uncertainty about our future has been removed."