Announcing profits of £101m in the first six months of the year, Persimmon said build costs had been negotiated down to 14% below their peak.

John White, group chairman, said: “Build costs are firmly under control at the lower prices we have negotiated over the last two years.  These lower input costs are helping us to rebuild and sustain higher margins.”

He said: “We have added 4,263 plots for mainly traditional housing in the first half with over 50% in southern markets.

“We also have a further 3,663 plots on which we have agreed terms and are proceeding to contract.”

The house builder also recently entered into a joint venture with St Modwen to initially develop 2,000 plots over the next few years.

In the first half of 2010, legal completions increased by 16% to 4,657 with average selling prices up 8.6% at £168,936.

The improved performance helped return profits to a more healthy £101.4m against £9.8m in the same period in 2009.

Revenues rose 27% to £777m, with underlying operating margin recovering to 8% compared to just 1.6% at the start of 2009.

Strong cash generation eroded the debt pile from £500m last time to £122m.

White added: “Overall, whilst we currently remain cautious, we are optimistic about the future of our business.

“We have a strong balance sheet, excellent cash generation, national coverage and an experienced management team.”