The U.K.'s biggest homebuilders have reported sharp increases in profits and signaled a positive year ahead though analysts question whether the good times will last against a backdrop of economic woes.
British homebuilder Persimmon posted a 52 percent increase in full-year profits, beating analysts' expectations. It said forward sales had reached 1 billion pounds ($1.5 billion), attributing its strong performance to the U.K.'s government lending scheme aimed at improving access to mortgages. The company's shares were down 0.7 percent by 12 p.m. London time, after rising initially. The company said it was on track to make its first dividend payment of 75 pence per share in June 2013.
A similarly positive outlook was reported by Bovis Homes on Monday, which also reported a sharp increase in pre-tax profits of 54.1 million, a 69 percent rise on 2011; shares declined 0.8 percent after rising initially.
"Persimmon has had a fantastic run, and the tick up we've seen today is definitely warranted," Joe Rundle, head of trading at ETX Capital, told CNBC. "They've got their house in order and they're going to be returning a lot of capital to shareholders and there are good figures from Bovis…It's had a good run as well," he told CNBC Europe's "Squawk Box."
The British government has attempted to protect the country's construction industry from the downturn by introducing the "Funding for Lending" scheme to help lenders access cheap finance and maintain appetite within the valuable British property market.
However, mortgage approvals in Britain in January fell 14 percent year-on-year, seasonally adjusted data from the British Bankers' Association showed on Monday. Gross mortgage lending was 7.7 billion pounds in January, down from 8.4 billion in December.
"January's severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses. While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer," BBA Director of Statistics, David Dooks remarked on the latest figures.
Rising national debt and sluggish to negative growth have contributed to a gloomy outlook for the U.K. economy - a picture likely to worsen after Moody's downgraded the U.K.'s credit rating on Friday, causing the pound to slip to a 16-month low versus the dollar.
(Read More: Is the UK the New 'Problem Child' of Europe?)
David Ritchie, CEO at Bovis Homes, denied that a weakening pound, higher living costs (the U.K.'s retail price index, which includes housing costs, stands at 3.3 percent in January from 3.1 percent in December) and lower wages would impact negatively on the company, but said the environment was "challenging."
"I think the business is well set to continue to work well in 2013 in what will be a stable but challenging market," he said. "We're not expecting mortgage market improvements."
"In terms of our customer base, they clearly have to generally borrow money from banks and the mortgage market has been constrained for over five years now and so we're dealing with a difficult market already," he said.
(Read More: Inflation is Coming, Says Bank of England)