Housebuilder Taylor Wimpey today said the UK housing market should avoid a "severe" downturn as recent signs gave hope of a recovery.

The group said prices were now broadly flat, while its forward order book had soared 73% since the year end to £971 million as buyers returned to the market.

Cancellation rates were below the long-run average and it is hoping to see an increase in selling prices over the second half of the year after keeping a tight control on its stock of unsold homes.

"Whilst wider economic conditions remain weak and rising unemployment could still have an effect on our markets, the severe downside scenarios for which we have been planning now appear less likely," said Taylor.

It added that despite some ongoing difficulties with mortgage availability and valuations, "there are signs that the situation is beginning to improve".

Taylor - which recently raised £510 million in an investor cash-call - said it was considering land buying opportunities to snap up cheap offers beginning to emerge.

It also signalled plans to begin new building projects again, with hopes to increase the number of sites outlets in the second half if conditions remain stable into the autumn selling season.

Shares soared more than 8% after the cheery update on the property market, which comes as the company itself begins to turn the corner.

It recently completed a long-running refinancing of the business, with the rights issue also helping bolster its balance sheet and offer legroom to make opportunistic land purchases.

The firm had been struggling under a £1.68 billion debt pile but approval from bondholders in late April completed the funding jigsaw and left it with bank facilities totalling £2.47 billion.

Taylor confirmed today it had also paid down debts to just over £1 billion, with further reductions due by the end of the year.

The group's said its US arm has also been seeing better trading, with improvements in reservations and cancellations since the end of April.

Solihull-headquartered Taylor - formed through the merger of George Wimpey and Taylor Woodrow in 2007 - is set to report half-year figures on August 5.