Persimmon, one of Britain's biggest housebuilders, has restored its half-year dividend after reporting a surge in profits.
The move indicates growing confidence in the housing market and comes a day after smaller rival Bovis Homes said it would reinstate its payout to shareholders at the end of the year, as long as the market does not go into reverse.
"Sales are reasonable for this time of year," said Mike Farley, Persimmon's chief executive. "We are 95% sold up for this year."
While sales slowed before the emergency budget in June and the usual pick-up in September could be rocky ahead of the government's spending review, he believes house purchases will only be deferred until there is more clarity on the looming public spending cuts.
He noted that mortgages approved by banks, while still low, are improving every month and there are more products on the market that require a smaller deposit, benefiting first-time buyers.
Estate agents are also getting far more properties on their books. "There's still a way to go, but we're on the right track," said Farley.
Persimmon's profits before tax jumped to £101.4m in the first six months of the year, from £9.8m a year ago. It raised its average selling price by 8% to £168,936, which helped boost its operating margin to 8% from 1.6% a year ago. Its target is to lift the margin to 15-17% over the next two years. Persimmon has also slashed construction costs by 14% since 2007 and is building more three-to-four-bedroom detached houses and fewer apartments in its efforts to improve profit margins. Flats now make up 22% of sales, a figure that drops to 15% in its forward-order book.
A traditional housebuilder based in Yorkshire, Persimmon is not present in inner city areas like London. Instead it is focusing on smaller towns and rural areas like the south east, which is recovering more rapidly from the housing slump than others.
Overall sales climbed 16% to 4,657 while the company's upmarket brand, Charles Church, has seen sales rise by 36%.
Persimmon said it would pay an interim dividend of 3p a share.
"Persimmon delivered a very strong set of interim results," said Anthony Codling at JP Morgan Cazenove. "Whereas Bovis talked about maybe reinstating the dividend at the full year if market conditions continue, Persimmon has gone one step further and re-instated the interim dividend, which in our mind is a clear sign of confidence."
Persimmon has bought 4,263 plots since December, taking its land supply to 58,957 plots.