Berkeley Group, the housebuilder that specialises in urban regeneration, is proposing to take a £363 million gamble on the current housing market, with funds that had been earmarked for shareholders.

Berkeley revealed this morning that it intends to delay paying out the final £3 of a £12 per share capital return by three years, so that it can take advantage of falling land prices. The sum represents just under half of the current market value of the company.

Tony Pidgley, managing director, said: "From this position of strength we can adapt to these challenging market conditions where sales levels are down by some 25 per cent and in which we are seeing a number of opportunities to acquire land and invest for the future."

Major shareholders have approved the proposed new structure for the scheme of arrangement, which originated in a 2004 plan to shrink the company and concentrate on urban regeneration rather than volume house building. However, the new scheme will still need to be approved by the annual meeting in September.

Shares in Berkeley Group were higher in early trading after the company bucked the trend for housbuilders by reporting annual profits up 3.2 per cent to £194.3 million for the 12 months to 30 April 2008. Although net asset value - a key measure for property companies - fell by 13 per cent.

The company said it had been a year of two halves as the slowing housing market had not really become apparent until November. Since then, the company has seen sales fall by 25 per cent below historic average levels, with sales of private housing down by 50 per cent.

However, in the full year Berkeley sold 3,167 units at an average selling price of £295,000. This compares with 2,852 units sold in the previous year at an average selling price of £285,000.

Berkeley Group said that the slowdown in the housing market had been dramatic. "Confidence and the all-important feel-good factor has been dented at a time when the market had in any event started to cool following the boom conditions of the recent years."

It said that the immediate future of the market was extremely challenging but added that if the wider economy could avoid recession and the banking sector returned to normality, "the long-term outlook need not be bleak".

In addition to Berkeley's proposals to retain capital for land-buying, it has a joint venture facility with a Saudi Arabian billionaire which gives it further funds of up to £1 billion.

The joint venture with Saad Investments, a fund controlled by Maan al-Sanea, the Saudi billionaire, has been set up to invest in development opportunities which are outside Berkeley's normal acquisition criteria, whether because of size of capital requirement or length of planning lead time.

Analysts at Numis Securities said: “The group continues to have strong forward orders, low net debt and a strong management and therefore we see it as one of the most resilient in the sector.”

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