HOUSE builder Persimmon is to look at providing more affordable housing in the south for first-time buyers priced out of the property market.

Allen Smith, the boss of the company's south coast arm, warned that flats and apartments - normally the first rung on the property ladder - are out of reach for many people trying to buy a starter home.

Meanwhile, Persimmon said interest rate hikes had begun to hit the property market across the UK as it posted a 45 per cent rise in half-yearly pre-tax profits to £220.3m.

The housing market had become more subdued as a result of the recent increases in the base rate to 4.75 per cent, with the upper end of the market more difficult and site openings delayed because of slow planning processes.

However, Persimmon stressed its large land bank, "acceptable" selling price and excellent profitable growth record left it in a competitive position.

Persimmon's south coast division completed 2,987 homes at an average selling price of £176,356, a price rise of 7.7 per cent from the previous year's £163,749.

Mr Smith, the managing director of Fareham-based Persimmon Homes South Coast, said: "Much of the land allocated for residential development in the southern region is along the coast and is particularly suited to the development of flats and apartments.

"Whilst these are ideal for those taking their first step on the property ladder, the high level of investment interest in recent times has meant that they are often out of reach of first-time buyers.

"In response to this, over the next 12 months, we will be looking at schemes that will provide more affordable housing for young purchasers."

According to the Land Registry, the average home in Hampshire earlier this year cost £212,000 - way beyond what many people can afford even on relatively good salaries.

Persimmon's south-coast section, which has 144 staff and was formed in 1997, has properties across Hampshire, Dorset and Sussex, with local developments at Southampton, the Isle of Wight, Alton, Lee-on-the-Solent, Alton andAndover.

Company chairman Duncan Davidson said: "Whilst the market has been more subdued since the recent interest rate increases, visitor levels remain good and there has been no significant increase in the use of sales incentives."