CREST NICHOLSON, the construction and property group, bounced back into the black in the six months to April and paid an interim dividend after passing the payment last year.

But a warning that the housing market had slowed in the second half sent its shares slipping 2p down to 87p, just below the rights issue price at which it raised pounds 19m in January to buy land.

John Callcutt, chief executive, said: 'It is necessary to inject a note of caution. The housing market has cooled in recent weeks. It is too soon to know whether the deterioration will continue or if the recovery is merely postponed.'

He said trading conditions in the construction division were still extremely tough.

Pre-tax profits of pounds 3m compared with a pounds 3.9m loss a year earlier. Earnings per share were 1.32p (loss 4.59p). The interim dividend is 0.6p.

The residential division completed 926 houses, 42 per cent more than a year earlier. The average selling price slipped slightly to pounds 72,000, reflecting a move towards smaller houses. After a doubling in operating margins to 9.5 per cent, the division's pre-tax profits increased from pounds 1.4m to pounds 5.9m. Reservations are currently 20 per cent ahead of last year, with selling prices 2 per cent better.

Losses in property activities fell from pounds 3.9m to pounds 500,000. A cautious approach was maintained, with tenants being secured before building was started.

In the construction division, losses grew to pounds 2m from pounds 300,000 because of low turnover resulting from a weak intake of orders in the second half of last year. Orders in period under review were 50 per cent better.